POSCO, the world’s fourth-largest steel producer, is seeking to beef up its presence in South Asia by acquiring shares in an Asian steel company.
The Korean steel giant said it has clinched a deal with Al Tuwairqi Holding Co. of Saudi Arabia to buy a 15.34% stake in Tuwairqi Steel Mills Ltd for $15M.
The Pakistani steelmaker is working to build a production complex in Karachi, the country’s financial capital. TSML plans to begin commercial production in January with an annual capacity of 1.28Mt of direct-reduced iron, Posco said.
DRI, also known as sponge iron, is produced by using gases generated from natural gas or coal. Its iron-rich characteristic makes a high-efficient substitute for scrap metal in the electric arc furnace system.
POSCO aims high as the deal will enable the steel mill to rake in dividends and expand its business scope in the worldís sixth most populous country with more than 180 million.
“Pakistan’s steel industry has a high growth potential,” said Chung Joon-yang, chief executive.
“Through the contract, POSCO will gain a foothold in Pakistan and boost business opportunities for affiliates involving construction, engineering and information and technology and others.”
POSCO estimates Pakistan’s steel demand at 12Mt in 2020, up more than 70% from 7Mt last year.