It takes a steely resolve to push for overseas expansion at a time when most companies are buckling under the pressure of a global economic downturn.
But for POSCO, South Korea's leading steelmaker, the crisis has presented an opportunity to secure an iron grip on the worldwide market.
When Chief Executive Officer Chung Joon-yang took the helm at the world's fourth-largest steelmaker in February last year, he pledged to boost the company's profile through strategic investment and mergers.
A year on, he has made it clear once again that POSCO will continue to chase acquisitions at home and abroad, saying "the company will seek aggressive management to seize opportunities ahead of others in the post-crisis era." The company is pushing to build a $7 billion plant in India's Karnataka state in addition to a $12 billion project in Orissa and a $6 billion Indonesian plant.
And over the past year, POSCO has taken over Asia Stainless Corp in Vietnam and Taihan ST Corp in Korea.
"POSCO's expansion push, particularly in overseas markets, is aimed at asserting its market presence and closing the gap with Chinese rivals," said Kim Gyung-jung, an analyst at Samsung Securities. "POSCO also wants to reduce its dependence on big suppliers of raw materials."
The expansion is just beginning. Last month, POSCO said it plans to nearly double its investment spending this year to a record 9.3 trillion won ($8.3 billion), with 3 trillion won earmarked for acquisitions.
And among numerous targets, its top priority at the moment is to snap up the 68 percent stake up for sale in Daewoo International Corp, a deal that could fetch around 2.5 trillion won.
The company also said last month it may buy up to 15 percent of an iron ore project in western Australia, Roy Hill.
"Basically, we have a two-pronged strategy for overseas expansion," said Choe Yoon-jung, a company spokeswoman. "First, we venture into areas where demand is rising. Second, we want to secure stable supplies of raw materials." She said POSCO's overseas push is also aimed at boosting output to reduce costs, thus raising profitability.
Analysts say that the Orissa project and other overseas projects will help raise POSCO's steel output dramatically, helping it better compete with Chinese rivals.
Chinese steel mills, led by Bao Steel Group Corp, are gobbling up stakes in overseas mines, and their production is expected to increase sharply down the road.
POCSO's Orissa project started in 2007 but has been delayed due to regulatory issues. The company has said it wants to start the construction of the steel mill this year, and produce 12 million tons of steel annually upon completion.
Last month, POSCO said that it had secured India's permission to acquire 88 percent of the land needed for the plant and was continuing talks with locals purchase the rest.
"The Indian project is very important for POSCO as it will provide cheap raw materials to the steelmaker and expand POSCO's output," said Ha Jong-hyuck, an analyst.
Output expansions overseas will add around 26 million tons, accounting for around 75 percent of POSCO's annual crude steel output of 34.7 million tons in 2008, analysts say.
