POSCO, Nippon Steel form tie-up

Pohang Iron & Steel Co., the world`s largest steel manufacturer, and the second-largest, Nippon Steel of Japan, have agreed to form a comprehensive tie-up for joint investment for projects in third countries and to expand each other`s friendly equity ownership to 3%.

Yoo Sang-Boo, chairman of POSCO, and Nippon Steel President Chihaya Akira are expected to announce an agreement officially at a press conference scheduled for 4 p.m. Aug. 2 at Nippon Steel`s headquarters in Tokyo.

The collaboration between the two companies includes four major areas: expanding each other`s ownership to 3%; joint development of steel technology; joint investment in third countries; and cooperation in development of information technology and new materials.

Initially, POSCO and Nippon Steel are expected to invest US$300 million in each other to reach equity levels of about 3%. Currently, POSCO owns a 0.24% stake in Nippon Steel, and the Japanese steel firm has a 0.54% share in POSCO.

It is believed that the expansion of collaboration between the two companies is designed to strategically cope with the integration among European steel mills.

Based on crude steel output, POSCO and Nippon Steel are the world`s largest and second largest steel firms with annual output of 26 million tons and 24.33 million tons respectively. The tie-up between the two companies is expected to have a great impact on the global steel industry.

POSCO has been stepping up cooperative relations with Nippon Steel, which includes an agreement to expand mutual ownership to 1%, since 1998 when debate on privatization of POSCO began.