POSCO in India

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Case Details:

Case Code : BSTA130
Case Length : 14 Pages
Period : 1960-2005
Organization : -
Pub Date : 2005
Teaching Note :Not Available
Countries : India
Industry : Steel

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

The Pohang Steel Co. (POSCO), one of the largest steel makers in the world, made a wide range of hot and cold rolled steel products. As South Korea had little native iron ore or coal, POSCO mostly purchased its iron ore and coal from Australia, Brazil, Canada, China, India, and Russia. POSCO had formed 18 joint ventures, in China (where it had six), Australia, Brazil, Canada, Indonesia, Myanmar, South Africa, Thailand, the US, and Venezuela. POSCO looked at India as a major source of iron ore in the long run. But when the company announced in March 2005 it was setting up a 10 million ton steel plant in Orissa, in the eastern part of the country, there was stiff political opposition to the deal.

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After several rounds of discussions between POSCO and the Orissa Government, the MoU was finally signed on 22nd June 2005. This cleared the way for the largest foreign investment ever in India. But even as the deal was finalized, skepticism ran high. Would the deal be beneficial for India? Would POSCO achieve its goals?

Background Note

After the Korean War, South Korea, the US, and its allies wanted to rebuild South Korea's infrastructure as quickly as possible. Steel was given top priority. Before long, about 15 companies were making various steel products.

With the backing of Korean president Chung Hee Park, momentum for a large steel plant grew in the late 1960s...

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