POSCO International to step up global expansion after hefty profits

POSCO International Corp. will step up global expansion in 2024 with a focus on electric vehicle components, eco-friendly energy exploration and grain trading as it is expected to post its highest-ever operating profits last year.

The company said on Sunday it will build two more plants for drive motor cores: one in Mexico and another in Poland. Drive motor cores are key components for EVs and hybrid cars.

The two plants, if completed, will bring the number of POSCO’s drive motor core factories to seven, including one built in Ramos Arizpe, Mexico in October last year.

The seven factories, including one each in South Korea, China and India, will likely have a combined capacity of 7 million units of motor core plants per year by 2030 and are expected to raise its market share to more than 10%.

A second plant to be constructed in Mexico will be located near the first one.

In 2023, the energy and trading arm of South Korea’s steel titan POSCO Group is believed to have earned around 1.2 trillion won ($911 million) in operating profit, higher than the prior year's 902.5 billion won, according to a company official.

FOOD BUSINESS

To boost its food trading business, POSCO International signed a preliminary agreement in September last year to invest in Bartlett and Company’s soybean processing company and set up a joint venture with the US grain exporter for the procurement of raw grain and flour.

“We plan to establish production bases in both the Northern and Southern Hemispheres to increase the stability of grain security,” said another POSCO official.

In the first half of this year, it will break ground on a palm oil refinery in Indonesia in a joint project with GS Caltex Corp., a Korea-based oil refinery.

In October last year, POSCO and GS Caltex agreed to make a joint investment of $210 million in AGPA Refinery Complex (ARC), an Indonesia refinery company established early in the year. The two Korea-based companies split the investment 60:40.

POSCO expects its partnership with GS Caltex to expand into other eco-friendly energy areas such as biofuel and jet fuel areas.

Sales from global business accounted for the lion’s share 87.2% of POSCO International’s net sales in the third quarter of 2023.

ENERGY

In the energy sector, which accounted for 12.8% of POSCO International’s net sales, the company plans to expand overseas gas field facilities and launch additional exploration projects.

It is poised to secure rights worth several billion dollars to explore and produce natural gas in Indonesia, marking its fourth gas development project following its operations in Myanmar, Malaysia and Australia.

POSCO operates two onshore gas fields in eastern Australia via Senex Energy, its joint venture between POSCO International with Hancock Prospecting Pty Ltd, a leading Australian mining firm.

POSCO and Hancock have invested a combined $300 million in Senex Energy to expand its large-scale gas processing facilities.

Once the facilities are expanded by the end of 2025 as scheduled, Senex is expected to triple its processing capacity to 60 petajoules. POSCO will seek to liquefy a portion of the gas for shipment to South Korea.

OFFSHORE WIND POWER

POSCO is also dipping its toes into the offshore wind power segment. Last year, it signed a memorandum of understanding with Denmark-based Copenhagen Infrastructure Partners (CIP) to cooperate on offshore wind and green hydrogen business development.

Write to Woo-Sub Kim at duter@hankyung.com
 

Yeonhee Kim edited this article.