South Korea's POSCO and Japan's Nippon Steel will
increase mutual holdings to ward off take-over bids amidst
the rising wave of consolidation in the global steel industry.
The two have also agreed to expand capital base and business
ties to face challenges from growing Chinese production.
Nippon will invest 445.1 million won ($464.6 million)
in POSCO to increase its holding by two per cent, POSCO
will invest the same amount to buy 111.6 million shares,
or a 1.64 per cent stake, in the Japanese steel maker.
two firms have decided to expand their strategic alliance
for a better position in the global steel industry,"
POSCO said in a filing with South Korean regulators. Nippon
and POSCO have also agreed to supply each other with steel
also said in a separate filing that it plans to build
a $361 million plant in Vietnam for the production of
cold-rolled steel. The 700,000-tonnes per annum capacity
plant is scheduled to start operating in late 2009. POSCO
said it would build a 3-million-tonne hot-rolled steel
plant in Vietnam and expand the capacity of the cold-rolled
steel plant to a 1.5 million tonnes once the market there
a highly profitable company, is estimated to have 1.5
trillion won in cash and has been looking for growth opportunities
outside the country. POSCO also announced plans last month
to build a plant in Mexico to make steel plates, with
an annual capacity of 400,000 tonnes.
Korean steel major is also setting up a 12 million tonne
plant in India. POSCO is also investing in India's infrastructure
with a stake in the Haridaspur Paradip Rail Company, a
private rail road project.
Steel, the world's third-largest steel maker, currently
owns a 3.32 per cent stake in POSCO, ranked No. 5, while
POSCO holds 2.17 per cent of Nippon Steel.
company is the world's third-largest steel maker after
Mittal Steel and Arcelor with annual crude steel output
of roughly 33 million tons. It manufactures pig iron and
ingots, steel bars, plates, sheets, pipes, and tubes,
as well as specialty, processed, and fabricated
steel products. Nippon Steel has interests in construction,
chemicals, non-ferrous metals, ceramics, electricity supply,
information and communications, and urban development
(theme parks and condominiums), energy, finance and insurance