Nov. 2006 — Posco announced it would strengthen its strategic partnership with Nippon Steel by increasing mutual shares. Posco is also planning to establish a cold-rolling plant in Vietnam and a continuous galvanizing line (CGL) in Mexico to expand global production and sales.

Posco finalized plans to extend its partnership with Nippon Steel as well as its investments in the steelmaking industry during a recent board meeting. The Board agreed that, as the world’s steel industry is rapidly increasing in size and globalization, and the competition for raw materials is intensifying between steelmakers, it is necessary for Posco to strengthen its strategic partnership with Nippon Steel and to establish a global production and sales network in Asia.

Posco will extend its strategic partnership with Nippon Steel by five years. Through the partnership Posco will continue to exchange slabs, promote business partnership in recycling iron-bearing derivatives, and purchase more Nippon Steel stocks to guarantee efficient promotion and performance of the business partnership.

From 2007 to 2011, the two companies will exchange slabs to stabilize production during furnace repair periods. Between February 2007 and March 2008, each will supply 200,000 tonnes.

In addition, Posco will help to support development of the recycling of iron-bearing derivatives using Nippon Steel’s Rotary Hearth Furnace (RHF) that will be installed in Pohang and Gwangyang Works. Posco will use the RHFs to recycle iron-bearing derivatives from the ironmaking and steelmaking processes into raw materials that can be used for production.

To provide support to the partnership, Posco and Nippon Steel will purchase more of each other’s stocks. Nippon Steel will purchase 2% of Posco stocks while Posco will purchase the corresponding percentage of Nippon Steel stocks. From the strategic partnership created in 2000, Nippon Steel currently possesses 3.32% of Posco stocks and Posco owns 2.17% of Nippon Steel stocks.

At the Board Meeting, Posco decided to begin constructing a 700,000 tonne/year cold-rolling plant in Vietnam in October 2007 to enhance its profile in the Southeast Asian market. The cold-rolling plant will be completed in 2009 with USD $361 million worth of investment. It will produce 300,000 tonnes of cold-rolled Full Hard for construction materials and 400,000 tonnes of cold-rolled coils for motorcycles and automobiles.

Posco will also establish a 400,000 tonne/year continuous galvanizing line (CGL) in Mexico for the production of automotive galvanized alloy sheets and galvanized steel sheets. Construction will begin in October 2007 with KRW 262 million worth of investment, and operations are targeted to begin in June 2009.