POSCO, the nation’s top steelmaker, signed a memorandum of understanding with the Bank of Development and Foreign Economic Affairs in Russia for the operations of Amurmetal, a scrap-consuming steelmaker in Khabarovsk, in Far East Russia, the company said on Monday.
The state-run Russian bank owns a 100 percent stake in Amurmetal. It took over the heavily indebted steelmaker in 2010 from its owner, State Duma deputy Alexander Shishkin. Since the acquisition, Amurmetal’s new owner, which has no experience in the steel business, has looked for a partner at home and abroad to operate and stabilize the faltering Amurmetal.
”Under the strategic partnership between POSCO and the Russian bank, aimed at restoring the ailing Russian steelmaker, POSCO will be responsible for operations of the Russian steel mill, while the owner leads management decision-making processes,’’ a POSCO official said.
POSCO chairman Chung Joon-yang (center) poses with Andrey Yurjevich Sapelin (left), deputy chairman of the Bank of Development and Foreign Economic Affairs in Russia, and POSCO executive vice president Jeon Woo-sig after signing an MOU with the state-run Russian bank for a strategic partnership in Khabarovsk on Monday. (POSCO)
“POSCO will get commission in return for the operations of Amurmetal,’’ the company said, though it did not reveal the commission amount.
When the two sides sign the main contract after fine-tuning the details for a month, POSCO will dispatch its skilled workforce to Amurmetal and control the production, sales and technology.
POSCO will operate the Russian steel mill for two years as a pilot project, after which the two partner firms will decide whether to extend the contract for five years based on performance, the company said in the press release.
“The partnership with the Bank of Development and Foreign Economic Affairs is meaningful as it is the company’s first project to export its know-how of steel mill operations,’’ the world’s fifth-largest steelmaker said in the press release.
POSCO also expects the project with the state-run Russian company will have a positive impact on other business projects in Russia under development.
POSCO and its affiliates are tapping business opportunities or cooperation in Russia in areas such as mining development, infrastructure development and modular-based housing markets.
By Seo Jee-yeon (
jyseo@heraldcorp.com)
