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POSCO expands energy and materials businesses

Korea Herald reported that POSCO is aggressively widening its business lines, particularly in eco friendly energy and materials business, as the company seeks new growth engines.

On August 22nd 2009, POSCO set up an affiliate POSCO Electrical & Electronic to transform household sewage into so called "refuse derived fuel" and use it to generate electricity. The heat generated during the procedure can be used for other purposes. In other words, POSCO E&E dries and reshapes sewage to make it a complementary coal fuel used to generate electricity.

POSCO officials said the company is doing the waste to fuel business in Busan and Pohang only, but plans to expand the business across the nation. Another growth engine of the steelmaker is development of fuel cells that can replace diesel engines currently used for ships. The company's subsidiary POSCO Power plans to develop related fuel cell technologies from as early as next month.

POSCO said that the new technology will help ships comply with the international regulation which forces shipbuilders to reduce nitrogen oxide emissions by twice the current reduction level by 2016.

POSCO Power will start building a stack manufacturing plant at the fuel cell production mill in Pohang from the end of the year, company officials said. The facility is essential in generating electricity.

A POSCO official said that "POSCO will invest KRW 432 billion by 2012 to commercialize a third generation fuel cell that can replace the phosphate and melted carbonate fuel cell."

The steelmaker is also eyeing on synthetic natural gas manufacturing business using cheap coal, in partnership with SK Energy. After gasification of cheap coal in high temperature and high pressure, the company can produce synthetic natural gas through refining and synthesis process.

POSCO plans to invest KRW 1 trillion by 2013 to build a coal gasification plant to produce 500,000 tonnes of synthetic natural gas a year. Through this business, the steelmaker will be able to secure synthetic natural gas that is 30% cheaper than existing natural gas as well as to help the local industry reduce KRW 200 billion worth annual imports of expensive natural gas. The large scale investment will also help create more than 300,000 jobs a year.

Mr Chung Joon yang CEO of POSCO signed a MoU on September 29th 2009 with Kazakhstan’s UKTMP to jointly establish a titanium slab manufacturing firm. Under the agreement, POSCO and UKTMP will each invest 50% of stakes in the company to build a titanium slab plant in Ust Kamenogorsk, eastern part of Kazakhstan. On September 1st 2009, POSCO established ferromanganese manufacturing company POS HiMetal. The company plans to start the construction of the plant in April 2010 and complete the construction in September 2011, to produce 75,000 tonnes of highly pure ferromanganese a year.

POSCO witnessed the need for development of highly pure ferromanganese because too much input of solid manganese metals lowered the temperature of molten iron to an excessive level, causing quality deterioration and cost buildup. POSCO said that it will spend KRW 220 billion in building the highly pure ferromanganese manufacturing plant and adopt Dongbu Metal's patented technology in the early business period.

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