Magazine

No. 6: Posco Steel


INDUSTRY

Steelmaking

SALES

$23.1 billion

PROFITS

$3.7 billion

These days many CEOs have ambitious global growth goals. But few match POSCO () Chief Executive Lee Ku Taek when it comes to laying out the money. In June Lee unveiled a 15-year plan to invest $12 billion in a new steelworks in the eastern Indian state of Orissa. That would be by far India's biggest foreign direct investment ever. The complex eventually would be able to produce 12 million metric tons a year. In return for this commitment, Lee signed a 30-year deal to source iron ore locally in Orissa.

With steel demand expected to remain strong, Lee is a man in a hurry. POSCO is building capacity as fast as it can and investing billions in high-end steelmaking technology. ``Everybody is battling against time, and we must be ahead of our rivals,'' he says. POSCO is holding its own. It may not be the biggest steelmaker (it is No. 5 globally), but it is one of the most profitable. It expects earnings to jump 12% in 2005, to $4.2 billion, on $21.7 billion in sales. And POSCO gets bigger almost by the hour. Besides its plans for India, POSCO has invested $2.2 billion in 15 joint ventures in China. At home, meanwhile, POSCO is cutting costs through tech. Finex, a new ironmaking process that could cut production costs by 20% and harmful emissions by 90%, will be a crucial part of a new steelworks POSCO is building at Pohang.

What could go wrong? A drop in steel prices as capacity builds. But Lee says POSCO will emphasize high-end products that will stay in short supply.


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