Korea Herald reported that Korean steelmakers have committed to a combined KRW 18.7 trillion in facility investment over the next 3 years, which will focus on reducing greenhouse gases and boosting energy efficiency.
Heads of steel companies including POSCO CEO Mr Chung Joon yang said after a meeting that they would spend KRW 6.96 trillion in 2010, KRW 5.84 trillion in 2011 and KRW 5.95 trillion in 2012. Mr Choi Kyung hwan knowledge economy minister said that "I hope that the steel industry can expand export markets to accelerate the economic recovery and double the efforts to reduce greenhouse gases according to international environment standards." In response to the minister's remarks, the chief executives said their spending would focus on reducing greenhouse gases and boosting energy efficiency.
Analysts said the steelmakers' spending plan for the next three years was not large, as the Korea Iron & Steel Association estimates the industry's facility investment is expected to reach KRW 10.1 trillion this year. They added that POSCO and Hyundai Steel have almost completed building new plants and refurbishing old mills, meaning that the amount of facility investment will decline next year. Mr Kim Kyoung jung analyst with Samsung Securities said that "POSCO will upgrade a steel plant in Pohang and complete a new plate plant in Gwangyang next year and Hyundai Steel is expected to complete its second blast furnace in early January 2010. The amount of facility investment will be smaller next year because large parts of the investment money will have been spent already this year."
Steelmakers also told Mr Choi that the government needs to withdraw its plan to scrap the temporary investment tax credit system, which was introduced in 1982 to help manufacturers invest more in building new facilities through tax credits. The Finance Ministry, mindful of a fiscal deficit next year, announced earlier that it planned to scrap 22 out of the 87 tax credit programs to make up for tax shortfalls next year.
Samsung's Mr Kim noted if the government's CO2 reduction plan is devised to regulate the total amount of CO2 emissions of the steel industry, it would definitely hurt the facility investment in the long run. He added that "But if the government regulates individual companies by CO2 emissions per tonne of steel, then it would not affect the steel industry much because steelmakers have been ready for it."