POSCO to manage Russian steelmaker over next seven years

Korean steel group POSCO will manage on consignment debt-stricken Russian state-owned steel company Amurmetall for up to seven years. It is the first time for POSCO to transfer management know-how to a foreign steel maker.

Jeon Woo-sik, executive director at POSCO, and Andrey Sapelin, deputy chairman at VEB, signed a memorandum of understanding for trust management of Amurmetall Monday at Khabarovsk, Russia. VEB holds a 100 percent stake in Amurmetall. POSCO Chairman Chung Joon-yang joined the signing ceremony. Formal contract will be signed in early October.

"We will use POSCO`s experience and know-how to actively support Amurmetall normalize," Chairman Chung said. "We will not remain in short-term rebound, but will promote facility restructuring to make the Russian firm make self-turnaround."

POSCO will allocate executives in charge of production, sales and technology to Amurmetall to transfer know-how on operation, raw material purchase and cost reductions, and will receive commission in return. This management system will be operated for two years initially, and extended five years further if performance is good for promotion of programs for self-turnaround.

Against this background, POSCO plans to create a new business model of operation know-how export.