Posco, the world’s second-biggest stainless steelmaker, plans to build a 480 billion won ($448 million) nickel refining unit in South Korea with its New Caledonian partner.
The plant, to be located at Gwangyang, southwest of Seoul, will increase the venture’s nickel production capacity by 80 percent to 54,000 metric tons a year by 2014, Posco said today in a statement. Societe Nickel de Nouvelle-Caledonie et Coree, the venture, will start construction next month.
Demand for stainless steel, used in cars and home appliances, is recovering as the economic growth in China and India increases the disposable income of people in the world’s most populous nations. Stainless-steel companies are the world’s biggest users of nickel, which accounts for 60 percent of their manufacturing costs.
The expansion will help boost Posco’s raw material competitiveness “when global prices of nickel are volatile,” the Pohang, South Korea-based company said.
Nickel for three-month delivery on the London Metal Exchange has risen 3.4 percent in the past year. The metal gained 1.5 percent today to $21,763 a ton.
The venture, set up with Societe Miniere du Sud Pacifique SA in May 2006, will source raw material from New Caledonia, according to the statement. Posco has a capacity to produce 3 million tons of stainless steel a year and is building plants and marketing bases in China, Vietnam and Turkey.
Posco shares rose as much as 2.4 percent to 404,000 won and traded at 401,500 won as of 12:53 p.m. in Seoul trading. The stock has declined 17 this year, compared with a 10 percent drop in the benchmark Kospi index.