POSCO Group aims to grow non-steel businesses to achieve sales of $75 billion

Prime Minister Han Duck-soo, left, and Kim Hag-Dong, vice chairman of POSCO talk during the Prime Minister‘s visit to POSCO Gwangyang steel mill on April 19. [Photo by Yonhap]

POSCO Group, owner of South Korea’s biggest steel mill, aims to grow its annual sales by more than 32 percent by diversifying its portfolio to non-steel sectors such as secondary battery materials, hydrogen and energy.

The group is targeting to grow its sales to more than 100 trillion won ($75.3 billion) in annual sales, up from the current 76 trillion won, it said, without providing more details including when it expects to achieve that goal.

“POSCO Group would like to contribute to the national economy by becoming a major environmentally-friendly future materials company that goes beyond steel,” Kim Hag-Dong, vice chairman of POSCO, said on Wednesday, at its steel mill in Gwangyang, 287 kilometers south of Seoul.

Kim’s remarks were made as he greeted Prime Minister Han Duck-soo and together toured the steel mill and Donghoan site in Gwangyang. Donghoan - located on the east coast of the Gwangyang steel mill - is a structure installed to prevent the erosion of the steel mill site from the sea.

Since 1989, POSCO has been reclaiming land from the sea located between the steel mill and Donghoan to expand at the Gwangyang steel mill. The land is about 2.3 million pyong (7.6 million square meters) in size, which is about one third of the size of the steel mill.

The area is home to a coke factory, a steel raw materials yard and liquefied natural gas terminal. Donghoan is expected to transform into a non-steel future advanced industry base for POSCO Group once regulations are eased by the government, possibly in the first half of this year, according to Han.

Prime Minister Han Duck-soo, center, and POCO staffs pose for the camera. [Photo by Yonhap]

The non-steel business, which includes trade, energy, materials and construction, at POSCO Group accounts for about 45 percent of its entire sales. It has been carrying out efforts to realign its business portfolio based on a future vision of becoming a green future materials company and achieving a carbon neutral goal by 2050.

Future investment is expected to focus on new growth engines such as battery materials, lithium, nickel and hydrogen, given that steel business inevitably emits carbon dioxide.

POSCO believes that the Donghoan site in Gwangyang is the optimum location to carry out its new businesses. Currently, however, only steel-related businesses can be carried out at the site under the enforcement of the industrial location act.

“We have been requesting the government and South Jeolla provincial government to also allow non-steel affiliates to promote business by adding advanced technology and green growth articles in the related act,” said an unnamed official from POSCO.

Prime Minister Han’s visit to the Gwangyang steel mill shows the government is also open to nurturing Gwangyang into a future-oriented industrial complex.

“The government’s latest decision (to lift regulation) will help achieve two goals of preemptively nurturing national advanced industry and balanced regional development,” Han said. “We will do our best so that private investments act as the priming water for the development of the regional economy.”

POSCO Group is considering a plan to invest 4.4 trillion won by 2033 in the Donghoan industrial site. Once the investment is complete, it will spark an annual 3.6 trillion won worth of production, 1.3 trillion won worth of added value and create about 9,000 jobs, according to POSCO.