POSCO finalizes ferrochrome deal with Indian firm

POSCO announced Thursday that it finalized a deal to establish a joint venture producing ferrochrome with an Indian company.

Ferrochrome is an alloy of chromium and iron used in stainless steel production.

POSCO’s partner in the venture is Indian Metals and Ferro Alloys (IMFA), India’s biggest ferrochrome manufacturer.

According to POSCO, Thursday’s deal finalizes agreements regarding a joint venture, preparations for which have been under way for some time.

The companies completed an electric arc furnace capable of producing 35,000 metric tons of ferrochrome each year in November, in Orissa State in eastern India, with 24 percent of the funds injected by POSCO, with the remaining 76 percent coming from IMFA.

According to POSCO, the Indian company will have full control over the joint venture, while it will be supplied with ferrochrome at lower-than-market prices for 25 years starting in 2012 for its input into the joint venture.

At present, IMFA produces around 150,000 tons of ferrochrome each year, and POSCO had until now been purchasing the alloy from the Indian firm on an annual contract.

POSCO imports around 480,000 tons of ferrochrome a year, and has another ferrochrome joint venture in South Africa that produces 60,000 tons annually.

By Choi He-suk  (cheesuk@heraldcorp.com)