Russia’s state-run steel company Amurmetal will be operated by POSCO. POSCO signed an MoU with Russia’s state development bank VEB in September to entrust and manage Amurmetal. VEB owns 100% of shares of Amurmetal.
Amurmetal, completed in 1942 with an annual production capacity of 2.15Mt, is the only electric furnace steel mill in the Khabarovsk region. Management became difficult due to the financial crisis in 2008, and VEB acquired 100% of the shares in 2010. However, since VEB does not have steel mill operation experience, and as the steel industry is experiencing a recession, the high production cost and debt has been making management conditions difficult. POSCO received a request to operate the facilities based on its management results despite the recession.
According to the MoU, POSCO will dispatch production, sales and technology management personnel to Amurmetal for steel mill operation, and will receive a fee for services in return. POSCO, to secure financial stability, will carry out a short-term program for 24 months, and once normal operation succeeds, will accept a long-term 5-year program that will be initiated for independent survival. POSCO and VEB will discuss the project scope and scale in the coming month for final agreement signing.
