By Kang Seung-woo
POSCO has signed a memorandum of agreement (MOA) with Mechel OAO, a leading Russian mining and metals firm, to develop energy resources and build industrial infrastructure, the steelmaker said Wednesday.
According to the MOA, the two sides will work together to set up stainless steel plants, while erecting support facilities at the Elga coalfield in Siberia with an estimated deposit of 2.2 billion tons.
POSCO expects the cooperation in natural resource development including coal will contribute to the world’s third-largest steel producer multiplying its suppliers of raw materials. Currently, POSCO heavily depends on Canada and Australia.
“The deal merges POSCO’s know-how in the steelmaking and construction sectors with Mechel’s expertise in resource development. Such an arrangement can benefit all sides,” said POSCO Chairman Chung Joon-yang.
The Elga coalfield located in the Sakha Republic of eastern Russia is renowned for its high-quality coal, but inclement weather conditions in the winter season have made it difficult to develop.
POSCO said that helping to boost the Elga field has gained significance due to the surge in international coal prices in recent years. The coalfield is scheduled to start full-scale commercial operations in 2012, with POSCO expecting a role in the mining of the energy resource in the future.
Meanwhile, POSCO A&C, the steelmaker’s affiliate, will construct living quarters for miners and a hotel near the Elga coalfield along with a hospital and police station.
POSCO said that its subsidiary’s success is attributed to a modular house construction method that can half the construction period, which results in cost saving.
The MOA is a follow-up to the memorandum of understanding for a comprehensive partnership signed between POSCO and Mechel on the sidelines of the Seoul G20 Summit in November last year.
The agreement reads: resource exploitation and joint investments and port modernization and infrastructure construction, review for construction of a steel mill to produce semi products in the mid and long term as well as the promotion of products.