Pohang Iron and Steel Company
In the 1960s, the Park government concluded that selfsufficiency in steel and the construction of an integrated
steelworks were essential to economic development. Because South
Korea had not had a modern steel plant before 1968, many foreign
and domestic businesses were skeptical of Seoul's decision to
invest heavily in constructing a steel plant. Despite the
skepticism, however, POSCO began production in 1972, just four
years after the company's inauguration in April 1968 with only
Japan provided the money for the construction of the initial
plant, following an agreement made at the Third South Korea-Japan
Ministerial Meeting in 1969. Financing included US$73.7 million
in government grants and loans, US$50 million in credit from the
Japan Export-Import Bank, and technical assistance from Nippon
Steel and other corporations. This cooperation was one
consequence of the normalization of relations with Japan in 1965
and reflected the view of the government of Japan as noted in the
Nixon-Sato communiqué of November 21, 1969, that "the security of
the Republic of Korea is essential to the security of Japan."
POSCO is located in the southeastern port city of P'ohang.
Previously a fishing port whose major industry was processing
fish and marine products, P'ohang is now a major industrial
center with almost 250,000 people. In addition to the huge
integrated steel mill, P'ohang has an industrial complex housing
companies that manufacture finished steel products of raw
materials provided by POSCO.
POSCO first began to sell plate products in 1972 and focused
its sales policies on the domestic market to improve steel selfsufficiency at home. Special efforts were made to supply quality
iron and steel to related domestic companies at below export
price to strengthen their international competitiveness.
POSCO's growth has been immense. By the late 1980s, POSCO was
the fifth biggest steel company in the noncommunist world, with
an annual production approaching 12 million tons worth 3 trillion
won. The further expansion of POSCO's productivity and size,
however, was sought at a time when the steel industries of the
United States and Japan were declining. POSCO's second-phase mill
at Kwangyang was completed in August 1988. A third-phase mill was
expected, by the early 1990s, to further increase crude steel
production to a total output of approximately 17.2 million tons a
year. In terms of productivity, POSCO was rated the world's best
steel manufacturer throughout the late 1980s and also was rated
at the top in terms of facilities.
In 1987 Seoul announced that it was going to transform POSCO
into a private company in line with the government's new policy
of privatizing state-run corporations. The government planned to
retain a majority share of the stock; initial reports in the
South Korean press in 1988 indicated that the sale of public
shares was going slower than anticipated.
Data as of June 1990