POSCO's Transition to a Holding Company Structure... Aiming to Triple Corporate Value by 2030 (Update)

Board Meeting on the 10th... Steel Business Spun Off as a Wholly Owned Subsidiary of the Holding Company
Listed Company is Holding Company POSCO Holdings... Steel Business Company and Future Newly Established Subsidiaries to Remain Unlisted

[Asia Economy Reporter Kim Hyewon] POSCO held a board meeting on the 10th and resolved to transition to a holding company system. With this, POSCO transforms into a holding company system for the first time in 21 years since its privatization in October 2000.

The holding company system maintains the holding company 'POSCO Holdings' as a listed company, responsible for discovering future new businesses, managing group businesses and investments, establishing group research and development (R&D) and ESG (environment, social, governance) strategies. The steel business company 'POSCO' will be physically separated and 100% owned by the holding company. POSCO plans to avoid listing not only the steel business but also any new corporations newly established under the holding company in the future.

This governance structure is evaluated as an advanced management governance model that prevents existing shareholder value dilution due to re-listing of core businesses, blocks conflicts of interest between shareholders of the holding company and subsidiaries, and directly links the value of unlisted subsidiaries to the value of the holding company's shareholders.

The current POSCO has been criticized for lacking swift decision-making and execution power necessary for discovering and nurturing new businesses, improving group business structures, and strengthening synergies among group companies, as the company's capabilities have been focused on enhancing steel business competitiveness. Despite promoting promising new businesses, the perception of being a steel-centered company was dominant, which led to the value of new growth businesses not being properly evaluated in the market.

Through this transition to a holding company system, POSCO Group plans to select steel, secondary battery materials, lithium and nickel, hydrogen, energy, construction and infrastructure, and food as the group's core foundational businesses, and strengthen competitiveness enhancement, synergy creation, and future new business discovery and nurturing centered on the holding company, thereby establishing a balanced growth system for the group.

In particular, the steel business is emerging as an important topic to transition to an eco-friendly production system with the global spread of carbon neutrality, including CCUS (carbon capture, utilization, and storage) and hydrogen reduction steelmaking technology completion. There is an increasing need for the steel-dedicated business company to lead low-carbon production technology R&D and production system transition.

The secondary battery materials business aims to expand anode and cathode production capacity to 680,000 tons by 2030 based on customer partnerships and leap to a global top-tier position through securing leading technologies. The lithium and nickel business will start full-scale development using its own mines and salt lakes and eco-friendly production technologies already secured, and will make every effort to secure additional raw materials, planning to have production capacities of 220,000 tons of lithium and 140,000 tons of nickel by 2030.

For the hydrogen business, the plan is to establish a production system of 500,000 tons by 2030 and 7 million tons by 2050 through building a global supply chain for blue and green hydrogen centered on seven strategic countries and investing in core technology development.

In the energy sector, POSCO Group plans to expand businesses linked to the hydrogen economy such as LNG, ammonia, and renewable energy. In construction and infrastructure, it plans to strengthen eco-friendly and smart technologies-based smart cities, modular eco-friendly buildings, and plant businesses. The food business aims to accelerate growth further by diversifying procurement regions and expanding the value chain.

POSCO Group aims to increase corporate value more than threefold by 2030 by establishing a balanced growth system through enhancing competitiveness in each core business.

POSCO Group explained, "Although there have been several discussions about transitioning to a holding company in the past, the current moment, when unprecedented revolutionary changes are occurring, was a consensus among the board that it is the optimal time for restructuring the management system." They added, "The transition to a holding company system will strengthen business specialization, discover and nurture future new business opportunities, enhance corporate value through synergy creation among group businesses, and lay the foundation for sustainable growth of the group."

POSCO plans to hold an extraordinary general meeting of shareholders on January 28 next year to submit the agenda for approval of the transition to a holding company system.

This content was produced with the assistance of AI translation services.