South Korean steelmakers, undeterred by the prospects of a pandemic-induced slump, are committing to their overseas investment plans to reinforce their global supply chains for future growth.

The country’s biggest steelmaker Posco Co. said Wednesday it would invest a total of 21.2 billion won ($17.5 million) in its wholly-owned Vietnamese subsidiary, SS VINA, over the next three years, with plans to execute 11.1 billion won this year.

The investment is to rearrange the lineup toward section steel and to improve operational productivity while cutting costs, the company said.

Posco last month entered into a joint venture deal with Yamato Group, handing over 49 percent of its SS VINA stake to the Japanese section-steel maker. Since its establishment in 2015, SS VINA has failed to make a single profit and is now in a state of complete capital impairment, in which mounting losses have brought its total capital below the par value of its capital stock.

Posco is also ramping up its automotive steel plate plant in Indonesia as scheduled. It is set to break ground on the third P-IJPC factory this year at Karawang International Industrial City in Jakarta, next to its two P-IJPC units. The new plant is expected to have an annual capacity of 100,000 tons, bringing Posco’s total capacity in Indonesia to 300,000 tons.

Indonesia is a strategically important market for Posco as it is a key gateway into Southeast Asia. It is the first site that Chairman Choi Jeong-woo visited upon his appointment in 2018. Since 2014, it has been operating PT.Krakatau Posco, a joint venture with Indonesia’s state-run Krakatau Steel. PT.Krakatau Posco’s output reached 3.02 million tons last year, making it the biggest of Posco’s overseas outposts.

Another Korean steel player Hyundai Steel Co. is also sticking to its plans to build a hot stamping plant in Ostrava, an industrial city northeast of the Czech Republic, to be ready for operation by January 2021. It spent 7.7 billion won last year of its total 59.1 billion won investment budget, and is expected to allocate another 51.4 billion won this year.

The company is constructing two hot stamping facilities and one blanking facility, which are estimated to turn out 3.35 million sheets of automotive steel a year.

“We’re set on completing our the Czech hot stamping plant to meet potential demand in Europe and expand our footprint in the global automotive steel sheet industry,” said a Hyundai Steel official.

Hot stamping is a process of forming steel by heating steel sheets at extremely high temperatures, pressing them into a desired shape and rapidly cooling them. This produces light and ultra-high strength steel parts, making them more cost-effective compared to lightweight metals such as aluminum or magnesium.

While keeping with their investment plans, the local steelmakers are also selling off money-losing business units to shore up their balance sheets as auto and appliance manufacturers are forced to shut down due to the outbreak.

By Seo Dong-cheol and Kim Hyo-jin

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