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 thirty-nine employees.
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
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