POSCO Int’l determined to outsmart Japanese trading firms

POSCO International Corp., the general trading and energy exploration unit of steel giant POSCO Holdings Inc., will step up its efforts to outsmart Japanese trading companies, which have been diversifying their business lines, its Chief Executive Jeong Tak said on Tuesday.

“Japanese general trading companies are our competitors,” Jeong told The Korea Economic Daily in an interview on Tuesday. “But we are building a better business model than them.”

His remarks come as Japan’s trading firms have drawn the attention of investors after legendary billionaire investor Warren Buffett said earlier this year that he has invested in five Japanese trading companies -- Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui, and Sumitomo Corp.

Japanese trading companies engage not only in trading a wide range of products and materials, but also in energy plant building and international resource exploration.

POSCO International is at the center of its parent group's push into secondary battery materials and other eco-friendly business areas beyond steel.

It is in charge of securing raw materials such as lithium and nickel, while POSCO Future M Co. produces anode and cathode materials, key ingredients of secondary batteries.

“We will focus on secondary battery materials and mobility for the time being,” Jeong said.

Last week, it held a ceremony for the completion of its drive motor core factory in Mexico.

Drive motor cores are equipped in electric vehicles and hybrid cars, for which POSCO Mobility Solutions Co. has already secured long-term contracts with Hyundai Motor Co. and an unidentified US carmaker.

POSCO Mobility, spun off from POSCO International in 2020, is South Korea's No. 1 motor core maker.

“We will continue to expand into other business areas to create synergy with our affiliates and transform from a general trading company into a general business company,” Jeong said.

He picked the energy, food, mobility and eco-friendly businesses as its future growth drivers.

POSCO International is the second-largest unit of POSCO Group after it absorbed POSCO Energy early this year. POSCO Holdings is the largest arm of the steel giant.

Since he took over as the leader of the merged entity in March of this year, he has prioritized integrating the two companies' energy value chains.

Before the merger, POSCO International had handled natural gas production and trading, with POSCO Energy in charge of energy storage and power generation.

It posted an operating profit of 636.7 billion won ($474 million) in the first six months of this year on sales of 17.2 trillion won. The buoyant results have pushed its share price more than 2.5 times higher year to date.

POSCO International aims to transform into a green company by 2030.

It is also seeking to advance into the fields of waste battery recycling and copper foil manufacturing.

Last month, it announced the signing of two memorandums of understanding (MOUs) in Madagascar and Tanzania, Africa to acquire natural graphite, used for battery anodes.

It plans to build a factory in the US to produce permanent magnets, an essential part of drive motor cores. 

Additionally, it is upgrading the Incheon LNG Combined Cycle Power Plant it has been operating for more than 50 years in Incheon, west of Seoul, to generate 1 gigawatt (GW) hydrogen co-fired power for commercial use.

POSCO is South Korea’s first private power generator.

The facility operates a total of seven combined cycle power generators with a combined capacity of 3.4GW.

POSCO will commence the renovation upon winning approval from authorities with an aim to complete it by 2027, he said.

Additionally, POSCO International plans to ramp up overseas energy exploration by developing extra offshore mining fields in Malaysia and Indonesia, Jeong added.

Write to Jae-Fu Kim and Hyung-Kyu Kim at hu@hankyung.com
 


Yeonhee Kim edited this article.