POSCO is set to transfer its proprietary FINEX steel making technology to India's MESCO. The two companies had signed a memorandum in March this year and will sign a main contract soon.
POSCO chairman Kwon Oh-joon shows particular attention to the Indian market. He chose a visit to a cold-rolled steel plate plant in India as the first overseas destination this year. He met Indian Prime Minister Narendra Modi twice this year to date.
Whenever he was asked about the investment strategy in India, he would answer, "We will focus on the west." In an interview held after a meeting with the Indian Prime Minister in May in Korea, he said, "We discussed issues concerning investment in the west." In an investor relations session on July 15, he also said, "When it comes to the Indian business, we will focus more on the west rather than the east."
POSCO has invested so much in the east of India for the past ten years. It pushed for a project to build a US$12-billion steel mill in Odisha in the east. In 2005, the company signed an agreement with the central government to establish an integrated steel mill with an annual capacity of 12 million tons in exchange for winning iron ore mining rights for up to 600 million tons. It was the largest foreign investment for India's history.
From the beginning, however, the project hit an obstacle with the area's residents and environmental advocates. In the end, the company decided that it won't pursue the Odisha project any more unless the Indian government makes a better offer.
The main reason POSCO is turning its attention toward the west is it will no longer be interested in the upstream molten iron production process and focus instead on higher value-added galvanized iron for automotive applications. As part of this strategy, POSCO has already established an automotive steel sheet plant in Maharashtra in January and will open a steel processing plant next year.