POSCO Leads the Way

POSCO, whose two huge plants in Korea make it the world's fourth largest steel manufacturer, is planning to build an enormous plant in the Indian state of Orissa. Donald Kirk asked POSCO for details on this exciting venture, which promises to be the most significant of any foreign investment on the Indian subcontinent. Here's how POSCO responded to Kirk's questions:

Question: How did POSCO become involved in the project?

Answer: POSCO-India integrated steel plant project is a significant part of POSCO's strategy to reinforce its global competitiveness. India has shown strong economic growth for the last few years and has great potential for the steel market. Orissa is an attractive destination for investment with abundant raw materials and labor resources.

Q: What do you anticipate in terms of production, global rankings and earnings?

A: With a proposed investment of US$12 billion (Rs 52,000 crore), POSCO-India seeks to construct a world-class, fully integrated steel plant in Orissa with annual production capacity of 12 million tons. The project will include iron ore mine development over 30 years (total 600 million tons) at captive mines located in the Keonjhar and Sundergarh districts of Orissa, as well as development of related infrastructure. 

Phase I is expected to conclude in 2014. Phase II will be completed three years after the completion of Phase I; and Phase III will be commissioned within three years after Phase II.  Total Investment: US$12 billion (Rs 52,000 crore).

Estimated Investment for Phase I: US$3.7 billion (Rs 16,650 crore)

Q: What is Korea providing that India needs - and how is each learning from the other's background, interests and experiences?

A: The POSCO plant in Orissa is expected to bring about meaningful growth and investment in India, and would also further help downstream industries like automobile, shipping and construction. POSCO brings its advanced technology and capital base to the joint venture with India, and offers India a step up in its goal to build its steel industry into a global powerhouse.

POSCO will make a major investment in India. This projects India as an attractive investment destination for other global players.

India will derive significant benefits from the POSCO-India project, as it will create an estimated 48,000 direct and indirect jobs in the region. In addition, the construction phase will create about 467,000 man years of employment for the local population.

There will also be large-scale mine development and linked infrastructure development (captive port, rail, roads, etc). Owing to the unique nature of the steel industry, which requires large equipment facilities, the project is envisaged keeping in mind operations for many years. The project will be followed by other likely investments, which will extensively contribute to the development of India's economy and society at large.

Q: What are the advantages of investing and working in India?

A: We believe that sustainable competitive advantages will be attained when the strengths of India and POSCO are combined. India's huge growth potential, human resources, its open policy and vast natural resources create an ideal environment for investment.

Q: What is the attitude of the government of India toward foreign investment?

A: The government of Orissa is lending its support to the project by forming a joint high-powered committee to review the progress of the project regularly. And a senior level government officer has been appointed to expedite project work.

Q: Is this Korea's biggest single investment in India?

A: Yes, this is the largest single foreign investment in India.