banner-1 Hon. Minister of Steel Sh. Narendra Singh Tomar
माननीय इस्पात मंत्री, श्री नरेंद्र सिंह तोमर
banner-1 Hon. Prime Minister of India
भारत के माननीय प्रधानमंत्री जी
banner-1 Hon. Minister of State for Steel Sh. Vishnu Deo Sai
माननीय राज्य इस्पात मंत्री, श्री विष्णु देव साई

POSCO to spend USD

It is reported that South Korean steel conglomerate POSCO Limited plans to spend at least USD 2 billion to create as many as 200 JV, many with US auto suppliers.

POSCO to spend USD 2 billion to create as may as 200 auto JVs

Mr Steven Bigatti, executive director of business development at POSCOs North America business group in suburban Detroit, said that POSCO and its international trading subsidiary Daewoo International, look to own as much as 20% of the JVs. POSCO wants to create ventures with auto suppliers, including metal stampers for doors and chassis as well as motor manufacturers.

He added that "We feel in the future of the supply business, companies will have more vertical integration. We have the raw material, and this is a way to participate in this trend of reverticalization of the supply base while maintaining our core competencies and matching up with the technology know how we just dont have."

The JV strategy is designed to increase POSCOs revenue by 220% to USD 200 billion globally by 2020 from USD 62.2 billion with net income of USD 3.3 billion in 2011.

Mr Bigatti said the company expects North American non steel automotive revenue to reach USD 500 million by 2015 from USD 200 million in 2012. Total North American revenue is projected to rise to USD 5 billion by 2020 from USD 1 billion in 2012. POSCO is not limiting the JVs to automotive.

Mr Bridget Freas, a senior equity analyst covering the metals markets for Morningstar Inc of Chicago, said that vertical integration is emerging as a trend among steel makers. POSCO is going in a different direction by acquiring assets on the end product side.

He added that "Vertical integration has been a hot topic in steel, but that has been mostly upstream mining and scrap recycling for raw materials, not downstream into the end markets. But I cant imagine too many structural JVs will be formed because automakers likely wont want to tie themselves to only one overarching supplier."

POSCO supplies engine and transmission parts to General Motors and Chrysler Group; seating components and aluminum and steel wheels to Ford Motor Co and Chrysler and textiles to GM. It also operates an aftermarket business selling wiper blades, commercial vehicle tires, steering and suspension components and batteries, among other products.

POSCO operates one wholly owned plant in the United States, a steel processing plant in McCalla and two in Mexico. It also operates a 50:50 JV in Pittsburg with US Steel Corporation USS POSCO Industries that supplies the oil and gas industry.