Posco halts operations at Pohang plant due to flooding from typhoon

Industry

Published: 07 Sep. 2022, 17:58

Posco halts operations at Pohang plant due to flooding from typhoon

Posco employees help with recovery at its Pohang steel plant in North Gyeongsang on Wednesday. [POSCO]

Posco halted operations at its Pohang steel plant in North Gyeongsang due to factory flooding caused by Typhoon Hinnamnor.

This is the first time the company has shut the factory in 49 years since 1973. Posco is Korea’s largest — and the world’s fifth largest — steelmaker.

“A nearby river overflooded due to the record-breaking 500 millimeters [19.7 inches] of rainfall, and the steel mill was flooded and electricity was cut off,” the steelmaker said Wednesday. “The three blast furnaces were not damaged but have been temporarily shut down.”

“We will resume operation right away when the electricity supply normalizes," it added. "But we cannot predict when the plant would be fully restored at the moment."

Posco also said it will shift some of the production to its Gwangyang steel mill in South Jeolla.

The shutdown will likely cause the company a serious loss, market watchers say.

The Pohang plant produced some 16.9 million tons of steel products annually as of 2021, including 2.2 million tons of hot-rolled steel and 3.4 million tons of thick plates. They are used in various industries including electronics makers, automakers and shipbuilders.

Sales from the Pohang plant accounted for 24.2 percent of Posco Holdings’ total sales last year. Posco is a fully-owned subsidiary of Posco Holdings.

Posco's Pohang steel mill was flooded after Typhoon Hinnamnor swept through the country Tuesday morning. [YONHAP]

Analyst Park Hyun-wook from Hyundai Motor Securities predicted that the shutdown will cause 40 billion won ($28 million) of loss in the company’s sales for every day it is closed.

Posco formed a task force for the plant's quick restoration Wednesday, led by Posco CEO Kim Hang-dong.

Some 15,000 Posco employees have been mobilized to the plant so far for the recovery.

“Above all, we will normalize our power transmission facilities in one or two days for quick restoration,” the task force said. “We will maximize the production capacity of our Gwangyang plant in an effort to minimize the damage.”

On Tuesday morning, two fires broke out at the Pohang plant and were extinguished in about four hours. The company is currently investigating the incident and whether the cause of the fires is related to the typhoon.

Posco Group Chairman Choi Jeong-woo and Posco CEO Kim visited the Pohang plant Tuesday to check the safety of employees and promised a quick return to normalcy.

Posco Holdings shares fell 2.6 percent to 246,000 won Wednesday. Posco International declined 2.2 percent while Posco M-Tech plunged 4.2 percent.

BY SARAH CHEA [chea.sarah@joongang.co.kr]