POSCO to Pursue Sale of Steel Plant in Zhangjiagang, China as Part of Restructuring Plan

The view of POSCO's overseas production processing center, the Zhangjiagang Pohang Steelworks in China

As part of its business restructuring, POSCO is pushing for the sale of its underperforming steel mill, Zhangjiagang Pohang Stainless Steel, located in Jiangsu Province, China.

According to the steel industry on the 7th, POSCO recently began the process of selecting an advisory firm for the sale of Zhangjiagang Pohang Stainless Steel. Established in 1997, Zhangjiagang Pohang Stainless Steel is a production corporation with an annual crude steel capacity of 1.1 million tons. Since the appointment of Chairman Jang In-hwa earlier this year, the POSCO Group has been undertaking structural reorganization at the group level.

Following the establishment of a 400,000-ton stainless steel cold rolling production system in 2003, POSCO completed a steelmaking and hot rolling plant capable of producing 600,000 tons of stainless steel hot-rolled coils in 2006, marking the first time POSCO built an integrated stainless steel production facility overseas.

POSCO Holdings (58.6%) and POSCO China (23.9%) hold a combined 82.5% stake, while Shagang Group, the second-largest steelmaker in China, owns 17.5%. The current sale consideration is due to Zhangjiagang Pohang Stainless Steel being classified as a low-profit business.

Last year, Zhangjiagang's stainless steel business posted a loss of $130 million (approximately 181.2 billion KRW) due to delayed economic recovery in China and oversupply. This more than doubled the previous year's loss of $59 million (approximately 82.2 billion KRW).

POSCO Holdings stated, "The restructuring of Zhangjiagang is part of the stainless steel business portfolio reorganization. After selecting an advisory firm, we will continue to operate the business through collaboration with global partners, including those in China."