Posco, SAIL looking at sharing resources

Posco,SAIL looking at sharing resources

South Korean steel company Pohang Iron and Steel Co. Ltd (Posco) and the Steel Authority of India Ltd (SAIL) will begin exploring opportunities for sharing a sales network and technology, when officials of the two companies meet in South Korea later this year.

A special task force consisting of four members each from SAIL and Posco has been appointed to chart the collaboration in several areas, including procurement of raw material, transportation and development of mines. They will meet twice a year to tap each other’s inherent advantages to build a business partnership. The visit will oversee research and operation of Posco’s state-of-the-art Finex steel making technology and other technologies.

“The first meeting will be more of an overview of activities we can take up in the future. We’d like to collaborate on technology that will help us focus on our future business," said a SAIL executive, who did not want to be named because of company guidelines.

This is the first meeting since Soung-sik Cho, Posco’s senior executive and board member, signed a memorandum of understanding with G. Ojha, SAIL’s director of personnel, two months ago.

Posco is building a 12-million-tonne steel plant in Orissa which represents the country’s largest foreign direct investment at $12 billion (Rs47,160 crore). Due to delays, construction of its private port in Orissa will start early next year, while actual building of the plant will start in 2009.

“Posco has a huge global market, while SAIL has a wide network in India. The collaboration will be beneficial to both the companies," said Changho Kwag, representative of the Posco Research Institute in New Delhi. Posco’s Finex technology, for instance, is touted as environment friendly—it is said to be less polluting than the traditional blast furnace used in steel making. It consumes both lumps and dust, or fines, of iron ore, the main raw material. Finex can also consume coal fines, another critical input in some steel-making processes.

SAIL, on the other hand, has some 1,100 approved dealers across 602 districts. Dealership sales touched 25,000 tonnes a month—400% times more than last year. The company is now aiming to sell 40,000 tonnes a month by the end of this year and will appoint 180 more dealers in the next few months to boost steel consumption in rural areas. Posco, which is the world’s fourth-largest steelmaker in terms of production, has two port-based plants of 14mt and 17mt each in South Korea.

At present, it has converted 1.5mt to Finex at its Pohang plant. The Orissa project is the first plant to be built with Finex from scratch.