POSCO’s Orissa Steel Project to be Delayed after 2012

Mr. Joo-yang Chung, CEO of POSCO, explained at a press conference held in South Korea on Thursday construction start of a new steel plant in Orissa province, India will be delayed in or after 2012. Mr. Chung said POSCO enhances global strategy including launch of joint steel business with SAIL, Indian largest steel maker, in 2011 while tries to reduce management cost by 2 trillion won per year this year to build up competitive power.

Mr. Chung revealed India’s environment agency is expected to give approval for land acquisition to POSCO at the end of January in Orissa province. On the other hand, POSCO continues hard negotiation with Orissa province government to acquire mining right of an iron ore mine though the firm plans to decrease the first-phase equity to 200 million tonnes per year from previous 600 million tonnes. Mr. Chung said POSCO prepares for immediate plant construction start before share acquisition be approved by Orissa province in the first half of 2012.

Meanwhile, Mr. Chung explained POSCO plans to reduce management cost by 1.5 trillion won per year on consolidated base and by 800 billion won on non-consolidated base in 2011. He said the firm tries to seek additional cost down measures and aims cost cut by total 2 trillion won on consolidated base.

As for raw material supply, Mr. Chung referred to coal supply tightness by flood damage in Queensland, Australia. He explained POSCO‘s operation hasn’t been impacted by the trouble yet. However, higher material costs should pressure POSCO’s profits.

He explained the firm has the rights of a nickel ore mine in New Caledonia and secures operating profit ratio at 5% for stainless steel business. Mr. Chung said the firm tries to commercialize new nickel smelting technology for profit improvement and increases self-sufficiency ratio of raw materials as well as cold rolling capacity.