Posco recently signed a memorandum of understanding with the Orissa State government of India for construction of an integrated steelworks and development of a mine at Bhubaneswar, the capital of Orissa.

Posco will construct the steelworks from 2007 to 2010 on about 4,085 acres of land at Paradwip of Orissa, located in the northeastern part of India, and produce 3 million tonnes of slabs per year. The production capacity of the steelworks will then be expanded to 6 million tonnes, and then ultimately to 12 million tonnes.

It is estimated that construction will cost US $3 billion in the first stage. Costs are expected to reach US $12 billion to support a production capacity of 12 million tonnes.

The Orissa State government promised to provide a total of 0.6 billion tons of iron sources, and will allow Posco to use iron ore from these sources over the next 30 years to ensure the competitiveness of the steelworks in India. The government will also provide infrastructures such as a railroad, road systems, water supply, and electricity as scheduled, to assist Posco in the steelworks construction process.

Since the memorandum of understanding has been established, a local subsidiary will be established in India in August. After the validity of the project is verified through a precision survey and economic analysis, a final MOA will be signed before the end of this year. Ground preparation will start at the beginning of 2007, with actual construction work to start in early 2008.

Posco India Steelworks will produce 3 million tonnes of slabs per year from June 2010 as the first stage of construction is completed. Posco will utilize its production not only for local sales in India, but also for further processing and supply based on demand in Korea.

With this project, Posco will expand capacity from its current 34 million tonnes to over 50 million tonnes and reinforce global competitiveness through its overseas steelworks, starting with India.