[K-Steel, Survival Transformation] ③POSCO Redraws the Global Map to Tackle Tariff Barriers and Supply Chain Restructuring

Acquisition of U.S. Steel Mill and Indian Joint Venture
Local Production and Raw Material Procurement Strategies Deliver Results
Argentina Lithium Production Reaches Investment Recovery Phase

Editor's NoteDue to oversupply from China and the strengthening of protectionism, the survival formula for the global steel industry is changing. The era of growth fueled solely by steel is coming to an end, while competition to secure supply chains for resources, energy, food, and materials is intensifying. POSCO Group is also accelerating the restructuring of its business portfolio, moving away from a steel-centric structure. The Asia Business Daily examines POSCO's transformation and global survival strategies in the steel industry through the 'K-Steel: Survival Transformation' series.

The restructuring of POSCO Group's business is extending beyond simple diversification to a global realignment of its production network in response to U.S.-led tariff barriers and supply chain shifts. The simultaneous acquisition of a U.S. steel mill, investments in Indian steel facilities, and the monetization of the lithium business in Argentina have kickstarted a full-fledged system for local production and raw material procurement across both steel and materials businesses. The strategy to expand production and raw material bases in the United States, India, and Argentina has already begun to yield results in the first quarter of this year.

According to the steel industry on May 8, POSCO's Indian subsidiary (POSCO Maharashtra) saw its operating profit in the first quarter increase by 28 billion won compared to the previous quarter. The Chinese subsidiary (PZSS), which had been suffering chronic losses, reduced its losses by 130 billion won, while the Vietnamese subsidiary (PY VINA) returned to profitability on the back of increased sales.

The recovery in the materials division is even more pronounced. The lithium business, which had been burdened by large-scale upfront investments, has entered a phase of returns. POSCO Argentina, responsible for lithium brine production, improved its operating profit by 37 billion won from the previous quarter, rapidly narrowing its losses. POSCO Pilbara Lithium Solution, which handles lithium raw material procurement and processing, also saw its operating profit increase by 43 billion won. The lithium business in Argentina has entered a full-fledged phase of investment recovery as commercial production begins.

POSCO has been expanding its portfolio to include resources, energy, food, and secondary battery materials to reduce its reliance on steel. Even within its core steel business, the company has been relocating production bases into target markets to address protectionism and supply chain realignment.

In Louisiana, United States, POSCO secured a facility with an annual production capacity of 2.7 million tons for upstream processes (including molten iron and steel slab production). It also established supply chains with Korea's shipbuilding and automotive industries. POSCO has partnered with U.S. steelmaker Cleveland-Cliffs in the automotive and heavy plate sectors. This is a strategic move to bypass tariff barriers and strengthen its dominance in the North American market. In India, POSCO is pursuing a joint venture with leading local steelmaker JSW Steel to operate an integrated steelworks with an annual capacity of 6 million tons, targeting high-growth markets.

The secondary battery materials business has entered full-scale vertical integration, covering everything from raw material procurement to production. By leveraging lithium resources secured in Australia and Argentina, POSCO has begun mass production and entered a profit-generating phase. Its joint mining investment with Australia's Mineral Resources is also expected to make a significant profit contribution.

The expansion of the materials supply chain continues. POSCO International has established a corporate venture capital (CVC) fund to secure rare earth elements and invested in companies with technology for reducing medium and heavy rare earth metals. Based on its Southeast Asian procurement hubs, the company is working to secure 4,500 tons of products annually, and in collaboration with U.S.-based ReElement, plans to achieve an annual production capacity of 3,000 tons of permanent magnets by 2028.

Cho Chul, a research fellow at the Korea Institute for Industrial Economics and Trade, stated, "With the continued strengthening of protectionism and supply chain realignment, the competitive landscape is shifting toward companies that have secured both production bases and raw materials. POSCO's expansion of investments in North America and India is part of this localization strategy in response to such trends."

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