POSCO signed an MOU with Mesco Steel last month to sell its FINEX 1 plant to the Indian steelmaker. Although, the government has yet to give its approval, the process is expected to go smoothly because of the deal relates to the construction of an integrated steel mills.
Mesco Steel was established in 1992, and its annual production capacity reaches 700,000 MT. Odisha is the region where POSCO has been in pursuit of integrated steel mill construction since 2005.
POSCO’s decision to sell the plant has to do with the characteristics of the region. Odisha is a place which is very sensitive to environmental problems. The locals and environmental organizations have demanded that manufacturers in the region adopt eco-friendly production techniques. The FINEX technique is characterized by much less exhaust gas emissions than blast furnaces as well as cost-saving effects.
POSCO is anticipating that the sale of FINEX will be a boon to its steel mill construction that has been delayed for close to 10 years owing to opposition from the locals.
The company also confirmed that it signed a memorandum of understanding (MOU) with India’s Mesco Steel to check the feasibility of selling off one of its Finex steelmaking facilities.
POSCO is the 1st steelmaker which has developed the Finex technology for mass production, with the first pilot plant going online in 2003 that can produce 600,000 MT of steel. Finex enables the production of molten iron using steaming Coal instead of more expensive Coking Coal.
It is also less polluting – producing significantly less sulfur & nitrogen than conventional furnaces. POSCO has 3 Finex processes with sale speculations usually centered on the first plant.
The company decided to improve its financial structure by selling the first plant, which is estimated to be priced at approximately 70 billion (USD 67.8 million).
“The FINEX technique is a part of the national key technologies subject to tech leak prevention, and thus government approval has to come first for the sale, POSCO explained, adding, the negotiation with Mesco Steel is in its early stage now, and it remains unknown if and when the deal will actually be made.”
With inputs from Business Korea
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