Posco is expanding its reach in the automotive sector after its subsidiary Posco Steel Processing & Service (PSPS) launched a business to produce motor cores.
Posco plans to establish its motor cores production at 2mn mt by 2022 and is looking to sign long-term contract deals with Asian and American companies. By 2025, the steelmaker plans to expand its motor core production to 4mn mt with the product valued at about $672mn.
Motor cores are used in generating electricity within motors and the rise of the electric vehicle market could result in 2-3 such cores being utilized per vehicle, compared with one at present. As a result, Posco expects the global market to surge from 8mn mt in 2020 to 38mn mt by 2030.
Posco launches carrier for iron ore
The Korean steel conglomerate also recently announced the first trip of its flagship LNG (natural gas)-powered bulk carrier, HL Green, which transported 180,000mt of iron ore from Australia to Gwangyang Works in China. Posco has added a long-term contract with H-Line Shipping to facilitate a stable cargo quantity, which will provide support for expanding the corresponding infrastructure of this environment-friendly carrier. Posco has ordered a similar second carrier.
Both vessels have been designed and constructed by Hyundai Samho Heavy Industries utilizing Posco produced plates and 9pc nickel steel, qualities of which previously would have been dependent on imports.
The company is also negotiating with the Korean Development Bank (KMD) to purchase a 12.6pc stake in HMM, formerly Hyundai Merchant Marine. KMD is the largest shareholder of HMM and plans to privatize the entity as it recently informed the Ministry of Strategy and Finance. The transaction is estimated at KRW1-1.5tr ($895mn-1.3bn). HMM previously plans to attain 1mn TEU’s (twenty-foot equivalent units containers) by 2022 and is expected to reach850,000 TEUs when all container ships under construction by Hyundai Heavy Industries are delivered in H1 2021. Each new ship is 16,000 TEUs.
Industry experts believe that HMM’s takeover by Posco will allow the latter to also reap benefits from synergies since it annually ships about 160mn mt of raw materials and finished steel. Other entities such as Posco International and Posco Chemical could take advantage of inhouse logistics options through vertical integration. Posco Group’s logistics costs were about 10pc of total sales last year.
($1=KRW1,117.80)