POSCO bets on India as next growth engine

POSCO, South Korea’s largest steelmaker, is betting on India to fuel its growth.

POSCO said it is ramping up efforts to develop more infrastructure and operations at the India office, aiming to meet the needs of the country’s rising demand for locally produced steel.

POSCO India recently reshuffled its unit and integrated local offices to focus on “glocalization,” a practice of adapting a product or service specifically to each region or culture.

The move is in line with POSCO CEO Kwon Oh-joon’s emphasis on the term, saying “overseas production, sales and service systems must become more localized,” in an email sent to employees on Thursday. 

Foreign carmakers including Nissan, Toyota and Maruti Suzuki have been expanding production facilities in India, but their demand for steel has not been met by local supply.

Tata Steel, which has an annual capacity of 47,000 tons, is by far a dominant player in locally manufacturing automotive steel plates, the industry is increasingly relying on imports in the growing market.

Steel imports in India rose 28 percent annually to stand at $16.3 billion last year, according to data released by Indian Minister of State Commerce and Industry Nirmala Sitharaman.

“Imports of steel are completely market-driven and take place mainly due to the domestic unavailability or limited availability of specialized steel products,” the minister said in a parliamentary session in March.

In response to the market demand, POSCO has invested some $1 billion to build three plants in one of the world’s fastest-growing economies.

In 2012, the firm built a steel plate manufacturing facility with an annual capacity of 450,000 tons of automotive steel plates. The company expanded its presence there by building an electric steel sheet facility in 2013 and a cold rolling mill in 2014 in efforts to diversify its steel product lineup.

As for its $12 billion steel mill project in Odisha, the steelmaker is reviewing various plans to push ahead with gaining access to an iron ore mine.

In 2005, POSCO inked a deal with the Odisha state government to build a steel plant with a 12 million ton yearly production capacity in return for a mining license for 600 million tons of iron ore.

But the project has remained idle for 10 years due to a dispute over mining rights and securing sites for the construction.

By Suk Gee-hyun (monicasuk@heraldcorp.com)