Posco Group is fast-tracking the restructuring of its non-core subsidiaries, divesting low-performing overseas businesses as part of a broader strategy to reallocate resources toward high-potential sectors, particularly battery materials.
According to industry sources on Monday, Posco International, the trading and resources arm of Posco Group, has agreed to sell its entire stake in Suzhou Pohang Steel to Guangdong Wcan Magnetic Materials. The transaction, valued in the 40 billion won ($29 million) range, is expected to close by June 30.
Founded in 2005, Suzhou Pohang Steel, a China steel processing subsidiary, specializes in processing electrical steel and manufacturing motor components, supplying Posco products throughout eastern China.
“It is true that the sale is part of our ongoing restructuring efforts, but final confirmation from the buyer and specific deal terms are still being finalized,” a Posco Group official said.
The decision reflects Posco International’s strategic assessment that continued operations in China’s oversaturated steel market are no longer necessary. Deteriorating conditions for Korean companies in China, exacerbated by rising geopolitical tensions such as US-China trade friction, also contributed to the move.
In a separate deal, Posco Engineering & Construction is negotiating the sale of its Vietnamese subsidiary, Posco E&C Vietnam. Busan-based auto parts maker Seoil Casting has been selected as the preferred bidder, and discussions over detailed terms are underway. The subsidiary has been involved in various local construction projects, including steel structures and plant facilities. The deal is estimated to be worth around 17 billion won.
Established in 1995 as a joint venture between Posco Construction and Vietnamese state-owned Lilama, holding 70 percent and 30 percent stakes respectively, Posco E&C Vietnam became wholly owned by Posco after it acquired Lilama’s stake in 2010. However, the unit has faced persistent challenges, with reports indicating it had fallen into complete capital erosion by mid-2023.
The recent moves are part of a broader restructuring initiative announced last year, under which Posco plans to liquidate or divest more than 120 underperforming or non-essential businesses by 2026. The goal is to raise some 2.6 trillion won to reinvest into its core pillars: steel and battery materials. As of the first quarter, the group had already achieved 40 percent of the target.
hykim@heraldcorp.com
