POSCO sets up joint venture in India

By Kang Seung-woo

POSCO has signed a contract with Indian Metals and Ferro Alloys (IMFA) to build a ferrochrome-producing joint venture, the company said Thursday.

POSCO, the world’s No. 3 steelmaker, and IMFA, India’s biggest ferrochrome producers, built an electric furnace in India which produced 35,000 tons of ferrochrome in November 2010.

Ferrochrome is an alloy of chromium and iron and used mainly in the production of stainless steel. Most of the world’s ferrochrome is produced in South Africa, Kazakhstan and India.

IMFA is the steel goliath’s second joint venture dealing with ferrochrome following one in South Africa, which was set up in 1996 and produces 60,000 tons a year.

POSCO expects the joint venture agreement to help it to secure a stable supply of ferrochrome because it has annually imported 480,000 tons of the mixed metal and demand for it from China has been surging of late.

The company said that it owns 24 percent of the joint venture, with IMFA holding 76 percent, but it did not specify how much it will spend on its Indian joint venture.

In addition, POSCO will be able to purchase ferrochrome at below-market prices for 25 years from IMFA, while the joint venture will have the rights to produce the alloy and operate the plant.

According to POSCO, IMFA produces about 150,000 tons of ferrochrome every year and the Korean company has been buying ferrochrome from the Indian counterpart on an annual contract basis.

“It is gratifying that POSCO struck a joint venture deal with the high-quality, ferrochrome-producing IMFA,” said Oh Chang-kwan, senior executive vice president of POSCO.

“We hope that both cooperation between POSCO and IMFA will help POSCO’s other projects in India, including an opening of a steel mill in Orissa.”