MT Arcelor Mittal New

Korean steel producer, POSCO (PKX) of late has been involved in signing memorandums of understanding with a Chinese carmaker and an African miner with a clear goal of expanding its operations. 

The first understanding was reached with Great Wall motor company, which is considered to be China’s third largest automaker in the year 2011, producing upto 0.48 million cars. The company, progressing rapidly with a growth rate of 28% in 2011, aims to produce a million units by the year 2015.

POSCO will be assisting Greal Wall in its new auto development efforts, taking part in design-material selection-molding development and assessment. Great Wall plans to replace the steel previously used with high-quality POSCO steel and wishes to produce as many as 50-100k units in the first phase of production.

In addition to Great Wall, POSCO signed a memorandum of understating with Cameroon based Legend Mining Limited via its African subsidiary. Both the companies reached an agreement to form a joint venture for the exploration of Legend`s Ngovayang iron ore project in Cameroon.

We believe that POSCO now occupies a good enough position to leverage from the growth momentum experienced in the global steel market. The company’s wide regional diversification, investments in raw materials and higher proportion of value-added products are advantages that contribute largely to POSCO’s success story.

In the fourth quarter and fiscal year 2011 results, the company reporetd a 44% increase in revenue and a 12% decline in net earnings. To add to the peril, competition is increasing manifold for the company, especially from its peers like Arcelor Mittal (MT) and Nippon Steel Corp. (NISTY.PK).

 
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