Posco Discusses Cooperation With European Steelmakers Mittal and Arcelor, No Commitments Made

Posco Discusses Cooperation With European Steelmakers Mittal and Arcelor, No Commitments Made

South Korean steelmaker Posco discussed ways to cooperate with the European steel company being created by the combination of Mittal and Arcelor on Friday, but said it reached no firm commitments.

The meeting came amid increased consolidation and attempts to forge alliances in the global steel industry.

Mittal Steel Co. NV, based in the Netherlands, agreed to acquire Luxembourg-based Arcelor SA last summer to form the world’s largest steel company. That deal is expected to be completed by May.

Pohang, South Korea-based Posco is the world’s third-largest steelmaker.

Roland Junck, representing Arcelor and Mittal, met Posco’s Chief Executive Officer Lee Ku-taek for about one hour, Posco spokeswoman Ko Min-jin said. Junck is currently a member of Arcelor Mittal’s management board.

Junck told Lee that Arcelor Mittal wanted to re-establish communication channels with Posco that had existed with Arcelor SA, according to a Posco statement.

Junck also suggested the possibility of mutual cooperation in overseas investment projects, such as in Asia and Mexico, the statement said, without elaborating.

Lee expressed interest in a dialogue and indicated his willingness to cooperate “whenever it helps develop the global steel industry and there is an area that is beneficial to both companies,” the statement said.

However, statement said, “There was no discussion about M&A between the two companies.”

The steel industry has seen an increase of merger and acquisition activity lately, including India’s Tata Steel $11.3 billion bid to buy European steelmaker Corus Group PLC

Posco’s Lee said this month that his company will seek bigger size, higher quality, lower costs and active strategic partnership with global rivals in what he called the best way to avoid becoming a takeover target.

Nippon Steel and Posco said in October that they had agreed to reinforce their capital and business ties.

Posco, whose shares are 62 percent owned by foreign investors, has taken various steps to protect itself from potential unwanted takeover interest such as by cementing ties with friendly domestic shareholders as well as the relationship with Japan’s Nippon Steel Corp., which ranks behind Mittal Steel as second biggest in the world.

Posco said earlier this month that its fourth-quarter profit more than doubled from the same period the year before, helped mainly by higher steel prices and lower raw material costs.

Posco sells about 70 percent to 75 percent of its products in South Korea.

Source: AP via biz.yahoo.com

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