OREANDA-NEWS. September 18, 2013. POSCO signed an MOU with Russia`s state development bank VEB on September 9th in Khabarovsk to entrust and manage Amurmetal. VEB owns 100% of shares of Amurmetal.

Amurmetal is the only electric furnace steel mill in the Khabarovsk region, completed in 1942, and has an annual production capacity of 2.15 million tons. Management became difficult due to the financial crisis in 2008, and VEB acquired 100% of the shares in 2010 for management. However, 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 excellent management results despite the recession.

At the signing ceremony, CEO Chung Joonyang attended and Senior Managing Director Jeon Wooshik and VEB Vice Chairman Andrey Yurjevich Sapelin signed the MOU.

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.

CEO Chung Joonyang said, `POSCO`s experience and operational know-how will be fully utilized to build a strong steel mill which can survive on its own, going beyond short-term normalization,`` expressing his will to stabilize Amurmetal.

Through the entrustment of Amurmetal management, POSCO plans to strengthen the POSCO brand while creating a new business model of exporting operation know-how.

Further, Korea-Russia cooperation based projects in the far-east region driven by POSCO are in review and are expected to gain momentum, including the #Siberia mine development, #development of social infrastructure including harbors and roads, and #residential development project utilizing modular construction methods.