Posco expands business in Vietnam

HANOI, Vietnam -- Korea’s top steelmaker Posco is expanding its business in Vietnam in various fields, especially in steel-processing and new city projects.

Since the steelmaker entered Vietnam in 1991, one year before Seoul and Hanoi established an official diplomatic channel, Posco has established 12 corporations and two offices in Vietnam, mostly in steel-making, steel-processing and construction. 

The steelmaker has run its Vietnam Ha Noi Processing Center in Hai Duong, 50 kilometers east of Hanoi, since July 2009.

At the plant of some 15,000 square meters, 110 workers at VNPC process the raw materials, imported from the Seoul headquarters, based on need from client companies. These mostly include Korean and Japanese electronics-makers in northern Vietnam, such as LG Electronics, Samsung Electronics and Canon.

The products range from high quality cold rolled steel, stainless products and hot rolled steel to electrical steel.

Having an annual processing capacity of 80,000 tons, the processing center has contributed to the rise of Korean exports to Vietnam, with sales jumping from 14,000 tons to 240,000 tons in six years.

Last year, the center expanded the range of products to colored steel plates, steel billets and section steel, drawing 50,000 tons in more sales.

“While the company is currently doing two jobs -- simply distributing the steel products and processing the steel based on the demand from clients -- it is aiming to focus more on product processing, as it is more profitable,” a VNPC official said.

LG Electronics in Haiphong is projected to become the largest client for Posco VNPC, as the electronics company’s sales of major products are sharply increasing over the years, particularly washing machines, vacuums and car audio systems, the steelmaker said.

To meet demand, the processing center has introduced additional processing facilities and expanded the plant.

The center’s operating profit is expected to reach $1.2 million this year, VNPC officials said.

Along with the steel business, Posco is seeking to expand its move in Vietnam with a new city project of constructing a high-end residential village in An Khanh, 10 kilometers north of Hanoi.

The steelmaker’s subsidiary Posco Construction and Engineering has jointly built Hanoi’s first self-supporting new city named “Splendora” with Vietnam’s largest state-run builder Vinaconex, working together since 2009. In the 2.64 million square meters of land, the company has built residential buildings, commercial buildings and others at a cost of $2.2 billion.

The construction is slated to be completed by 2029, with only one out of five stages of construction finished.

The residential region will comprise a total 6,196 households, with 3,580 apartments, 836 villas and 699 terrace houses.

Having its own social infrastructure such as power substations and water treatment facilities, the new city will be run independently, unlike other cities. International schools, quality hospitals and high-end accommodations will also be constructed, the company said.

Other than the steel business and the new city project, Posco is speeding up its moves in the energy sector, also building Vietnam’s first-ever independent power plant.

By Lee Hyun-jeong (rene@heraldcorp.com) /Korea Herald correspondent