Posco teams up with Nissan on steel factory

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Posco teams up with Nissan on steel factory

Posco, the world’s third-biggest steelmaker, and Japan’s Nissan Motor Co. will build a processing plant in Kawasaki to make automotive and stainless steel.
The factory, Posco’s third in the country, will have a capacity of 120,000 tons and be completed next May, Ko Min-jin, a spokeswoman for the Pohang-based company, said yesterday. The venture is “to secure a stable supply of steel,” said Kana Minamitate, a Nissan spokeswoman. “Boosting negotiating power with Japanese steelmakers is not the goal.”
Posco sells about a quarter of its output outside its home market, and has been expanding operations overseas to benefit from rising demand, targeting new factories in India and Mexico. Nissan halted output at three of its Japanese plants for five days in November 2004 because it didn’t have enough steel.
“It’s good news for Posco,” said Shin Yoon-shik, a steel analyst with Meritz Securities Co. “The plan signals that the quality of Posco’s products is recognized by Japanese automakers, which have higher standards than Korean companies.”
Posco said in December last year it will spend about $400 million by 2010 to increase the number of processing plants overseas to 40 from 14. Japan is the world’s third-largest auto market behind the U.S. and China.
The new factory, which will use hot-rolled steel from Posco’s Korean plants, is part of a joint venture established last year in which Posco holds a 69 percent stake, said the steelmaker. Nissan’s Pauline Kee, another spokeswoman for the carmaker, said Posco held 70 percent of shares, with the balance held by Nissan Trading Co., one of the company’s wholly-owned units. The venture would help the Korean steelmaker gain a further foothold in the Japanese market, which is relatively closed to foreigners, Meritz’s Shin said. The company has its other Japanese plants in Osaka and Nagoya. Bloomberg
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