Posco, South Korea's top steelmaker, signed a memorandum of understanding with the Bank of Development and Foreign Economic Affairs in Russia to take over the operation of Amurmetal, a scrap-consuming EAF steelmaker in Khabarovsk, Far East Russia.

The state-run Russian bank owns a 100% stake in Amurmetal. It took over the heavily indebted steelmaker in 2010 from its owner, State Duma deputy Alexander Shishkin. Since the acquisition, Amurmetal’s new owner, which has no experience in the steel business, has looked for a partner at home and abroad to operate and stabilise the faltering Amurmetal.

Posco is to receive commission in return for operating Amurmetal in a two-year contract as a pilot project after which the two partner firms will decide whether to extend the contract for five years based on performance,.

Posco will send a skilled workforce to Amurmetal and control the production, sales and technology.

The partnership with the Bank of Development and Foreign Economic Affairs is the company’s first project to export its know-how of steel mill operations.

Posco also expects the project with the state-run Russian company will have a positive impact on other business projects in Russia being considered.

Already, Posco and its affiliates are tapping business opportunities or cooperation in Russia in areas such as mining development, infrastructure development and modular-based housing markets.

Source: Daily ‘The Korea Herald’, Seoul