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POSCO Holdings: Forging a Nation from Steel
I. Introduction: The Miracle in the Making
The monsoon season of 1970 brought more than just rain to the sleepy fishing village of Pohang. Cement trucks rolled through unpaved roads in the dead of night, their headlights cutting through sheets of water as they converged on a muddy stretch of coastline. For two consecutive months, construction crews worked around the clock, pouring concrete foundations that would become the bedrock of South Korea's industrial future. The man orchestrating this "blitzkrieg construction" was Park Tae-joon, a former major general who famously ordered workers to tear up and re-pour an 80% completed concrete slab because portions were ten centimeters too high. Such perfectionism seemed almost absurd given the circumstances—a nation still scarred by civil war, with per capita GDP lower than Ghana's, attempting to build a world-class steel mill.
POSCO (formerly Pohang Iron and Steel Company) is today a South Korean steel manufacturer headquartered in Pohang, South Korea. It had an output of 42 million metric tons of crude steel in 2015, making it the world's sixth-largest steelmaker by this measure. In 2010, it was the world's largest steel manufacturing company by market value.
The central question that drives this story is both simple and extraordinary: How did a country with zero steel production and a GDP per capita lower than Ghana's build one of the world's most efficient steelmakers in less than a decade? The answer reveals not just the biography of a company, but the DNA of modern South Korea itself—a tale of nation-building through industrial policy, the "developmental state" model, founder-driven excellence, privatization challenges, and now, a dramatic pivot from steel to the materials of tomorrow.
In early 2007, Warren Buffett's Berkshire Hathaway purchased a 4% stake in POSCO. The Oracle of Omaha stood to make a tidy profit on his investment which he bought for $572 million. The stake was worth 1.23 trillion won ($1.31 billion) as of its Wednesday's closing share price. Berkshire sold its share later in 2014. What did Buffett see in this Korean steelmaker? And why did he exit? These questions illuminate broader themes about commodity businesses, competitive advantages, and the difficulty of sustaining excellence across generations.
POSCO Holdings reported 2024 consolidated sales of KRW 72.688 trillion, operating profit of KRW 2.174 trillion, and net profit of KRW 948 billion. POSCO Holdings' consolidated sales, operating profits, and net profits decreased by 5.8%, 38.4%, and 48.6%, respectively, compared to the previous year. The company stands at an inflection point—its traditional steel business under pressure from Chinese oversupply, while its ambitious bet on battery materials navigates the volatile "chasm" of the EV transition. This is the story of how steel built a nation, and how that nation's steelmaker is now trying to reinvent itself for a post-carbon world.
II. Historical Context: Post-War Korea and the Steel Imperative
To understand POSCO, one must first understand the Korea of the 1960s—a landscape of devastation and deprivation that would seem to make heavy industrialization an act of collective delusion. The Korean War had ended just over a decade earlier, leaving behind a nation cleaved in two, its infrastructure demolished, its population traumatized. American aid kept the economy on life support, but domestic production was negligible. The country was, in the parlance of development economists of the era, "backward."
Since South Korea had not possessed a modern steel plant prior to 1968, many foreign and domestic businesses were skeptical of Republic of Korea Government's decision to invest so heavily in developing its own industry. Western development experts viewed the idea of building an integrated steel mill in Korea the same way they might have viewed a proposal to build a subway system in the Sahara—technically possible, perhaps, but economically irrational.
However, as Korea's economy was considered "backward" or underdeveloped, and possessed no apparent competitive advantage for heavy industrialization, foreign lenders refused to commit and economists advised against moving forward. Park had the inspired idea to turn to the Japanese government, with whom Seoul had normalized relations in 1965. Japanese sources ultimately provided significant funding in the form of grants and loans as part of the treaty terms; credit from the Export-Import Bank of Japan; and technical assistance from Nippon Steel.
The rationale for steel was strategic as much as economic. Park Tae-joon famously described steel as "the rice of industry," emphasizing its role as an indispensable resource for national development. Without domestic steel production, Korea would remain permanently dependent on imports—vulnerable to supply disruptions, unable to develop downstream industries like shipbuilding and automobiles, forever a buyer rather than a maker.
Park decided to channel the economic development capabilities of the state into the development of several key industries: steel, petrochemicals, automobiles, machine tools, shipbuilding, and electronics. This was over the objections of many contemporary observers, including many economists within and outside South Korea—those opposed claimed the country's economy and institutions were putatively not insufficiently advanced to handle the comprehensive industrial economy.
With the second Five Year Plan in 1967, Park founded the Kuro Industrial Park in southwestern Seoul, and created the state owned Pohang Iron and Steel Company Limited to provide cheap steel for the chaebol, who were founding the first automobile factories and shipyards in South Korea. The pattern would repeat across East Asia: state-directed capitalism, patient capital, protected domestic markets, export orientation. But Korea's version was distinguished by its ambition and its speed.
The developmental state model that Park Chung-hee constructed drew heavily from Japanese precedents—unsurprising given his education at Japanese military academies during the colonial period. Park Chung Hee was educated in Japanese military academies, and was said to be more comfortable speaking Japanese than Korean. The economy that he built with his Japanese-educated friends was modelled on Japan's example.
Inspired by Japan's success, Park had the nerve to ignore them. In the late 1960s western donors refused to back Park's plan to build a steel mill in South Korea, arguing that a peasant economy could not support a successful steel industry. But Park Tae Joon, the man in charge of launching the steel plan, had been educated at Waseda, one of Japan's top universities. He crossed the Sea of Japan to secure promises of investment and technical advice from his old friends.
For long-term investors, the lesson is profound: sometimes the greatest opportunities arise precisely where conventional wisdom sees only impossibility. The World Bank wouldn't lend to Korea for steel. Western development economists advised against it. But the Korean government and its Japanese partners saw something different—a nation willing to sacrifice, a workforce eager to prove itself, and a strategic location that could serve Asian markets. They were betting not on present capabilities but on future potential.
III. The Founder: Park Tae-joon—The "Korean Andrew Carnegie"
In the annals of industrial history, few figures loom as large in their national context as Park Tae-joon does in South Korea's. Park Tae-joon (24 October 1927 – 13 December 2011) was a South Korean business tycoon and politician who briefly served as the prime minister of South Korea in 2000. His most renowned accomplishment includes founding of POSCO and growing it into one of the world's largest and most successful steel companies during his multi-decade tenure as chairman and CEO. For this, he was often called the "Korean Andrew Carnegie."
A native of Pusan, Park grew up in Japan and was studying engineering at Waseda University in Tokyo when World War II ended. He returned to Seoul after Liberation, and enrolled at the Korea Military Academy. He spent over a decade in the military, serving with distinction during the Korean War.
This unusual biography—straddling Japanese colonial education and Korean military service—would prove essential to POSCO's founding. Park understood Japanese industrial methods intimately, spoke the language fluently, and maintained personal networks with Japanese business leaders. But he was also a decorated Korean officer, fiercely nationalistic, driven by a mission to prove his country's capabilities.
Before POSCO, Park demonstrated his turnaround abilities at a struggling state-owned enterprise. The Korean government created Pohang Iron and Steel Company, Ltd (POSCO) in 1968 and appointed as president of the mill a competent retired army general and friend of President Park Chung Hee, Park Tae-joon, a man with a track record of having turned around the government-owned Korea Tungsten Company.
The success at Korea Tungsten provided Park with practical experience in heavy industry logistics, international trade negotiations, and turning around distressed assets—skills that directly informed his later role in establishing POSCO in 1968.
Park's leadership style combined military discipline with a kind of evangelical fervor for industrialization. He famously lived on construction sites, inspected work personally, and demanded perfection from subordinates. The story of the ten-centimeter-too-high concrete slab became legendary within POSCO—an illustration of standards that would tolerate no shortcuts.
Within a decade, the company had transformed a sleepy port on the southeast coast into an industrial hub. In an oft-repeated anecdote, Chinese leader Deng Xiaoping is said to have asked Nippon Steel in the late 1970s to replicate POSCO's mills in China, only to be told that it would still need a manager like Park to achieve similar output.
This anecdote captures something essential about POSCO's early success. The technology came from Japan. The capital came from Japanese reparations and export-import bank loans. But the execution—the relentless drive to build faster, better, cheaper—that was Park Tae-joon.
Park's vision extended beyond steel production to institution-building. POSCO CEO Park Tae-joon was quoted as saying, "You can import coal and machines, but you cannot import talent." Park realized the need for Korea to educate their youth in science and technology to ensure Korea's position in the high technology arena. Park founded the Pohang University of Science and Technology (POSTECH) in 1986 as Korea's first science and technology research-oriented university.
In 2012 and 2013, the Times Higher Education ranked POSTECH 1st in their "100 Under 50 Young Universities" rankings. That a steelmaker founded one of Asia's top engineering universities speaks to Park's understanding that sustainable competitive advantage requires continuous investment in human capital.
For investors, Park Tae-joon represents both the opportunity and the risk of founder-led companies. His 25-year tenure delivered extraordinary results—but also created a cult of personality that made succession difficult. When he departed in 1993, changes in managerial systems and organizational structure accelerated when POSCO's president and founder, Park Tae-Joon, who had wielded absolute managerial authority for more than 25 years, resigned.
IV. Founding and the Japanese Reparations Gambit (1968-1973)
The financial architecture of POSCO's founding remains one of the most creative pieces of development finance in post-war history. With Western lenders uninterested and domestic capital nonexistent, Park Tae-joon found an unconventional solution.
In April 1968, President Park Chung-hee appointed him to establish the Pohang Iron and Steel Company (POSCO) as a state-owned enterprise, utilizing $500 million in Japanese reparations from the 1965 normalization treaty to construct integrated steel mills at Pohang rather than disbursing funds as immediate cash compensation.
POSCO was established on April 1, 1968, as Pohang Iron and Steel Company, Ltd., through a joint venture between the South Korean government and Korea Tungsten Co., Ltd., aimed at building an integrated steel mill to achieve self-sufficiency in steel production amid the nation's push for heavy industrialization. The initiative aligned with the government's Third Five-Year Economic Development Plan, which prioritized steel as a foundational industry for economic transformation, funded in part by $123.7 million from the Japanese Reparation Fund signed in December 1969.
Construction of the Pohang plant began on April 1, 1970, and was dedicated on July 3, 1973, with an initial annual capacity of 1.03 million metric tons. 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$119 million in government grants and loans, US$54 million in credit from the Export-Import Bank of Japan, and technical assistance from Nippon Steel and other corporations.
This decision prioritized long-term industrial capacity over short-term fiscal relief, enabling the first blast furnace to commence operations in June 1973, two years ahead of schedule, and laying the groundwork for self-reliant steel output essential to downstream manufacturing sectors like shipbuilding and automobiles.
The decision to use reparations for industrial development rather than direct compensation was politically controversial. Many Koreans had suffered under Japanese occupation and felt entitled to personal restitution. But Park Chung-hee's government made a different calculation—that building productive capacity would benefit the nation more than one-time payments.
This gambit reflected a broader philosophy of developmental states: patient capital, long-term planning, and willingness to defer consumption for investment. The contrast with more market-oriented approaches couldn't be starker.
The "blitzkrieg construction" methods that characterized POSCO's early years reflected both Park Tae-joon's military background and the urgency of the national mission. The first phase of the POSCO project, with a production capacity of 1.03 million tons of steel per year, was finally completed in July 1973, three years after the groundbreaking.
As Korea's steel projects proceeded, starting with POSCO in the early 1970s and continuing well into the 1990s, the absolute capital and technical gaps that had first divided Korea from other advanced economies around the world gradually narrowed and closed. Whereas two-thirds of the cost for the POSCO project, until its second phase, came from foreign sources, the proportion decreased over time to less than 50 percent by the project's fourth phase. In the 1980s, Korea began to build other steel mills with domestic funds, private loans, and the like.
V. Building the Korean Miracle (1973-1992)
The two decades following POSCO's founding represent one of the most remarkable industrial buildouts in human history. Construction of the Pohang plant began on 01 April, 1970 and became operational on 03 July, 1973 with a capacity of 1.03 mtpa. After four phases of expansions, the crude steel capacity increased to 9.1 mtpa by 1983.
The second phase of construction at Pohang began in 1974, and Korean engineers were still only involved in specification inspection. However, by the time the third phase had begun in 1976, Koreans had taken over material balance and facilities specification and inspection of drawings. When the fourth stage began three years later, Koreans had supplanted foreign engineers from the task of general engineering planning. The shift to domestic technological skills was also evident in the declining levels of royalties paid to outside experts from $6.2 million for the first stage, $5.8 million for the second, $4.8 million for the third, and nothing for the fourth. By the time the last stage of construction had been completed, POSCO's crude steel production capacity was 8.5 million tons.
This progressive indigenization of technical capabilities represents perhaps the most important legacy of the POSCO project for Korea's broader development. The country didn't just build a steel mill—it built the human capital and institutional knowledge to become a world leader in heavy industry.
POSCO's domestic pricing strategy reflected its mission as a national champion. POSCO first began to sell plate products in 1972 and focused its sales policies on the domestic market to improve steel self-sufficiency at home. By selling to Korean shipbuilders, automakers, and construction companies at competitive prices, POSCO enabled the development of downstream industries that would themselves become global leaders.
It was the fifth biggest steel company in the world, with an annual production approaching 12 million tons worth 3 trillion won. POSCO continued to expand productivity and size at a time when the steel industries of the United States and Japan were declining. POSCO completed its second-phase mill at Gwangyang in August 1988. A third-phase mill completed in 1992 further increased crude steel production to a total output of approximately 17.2 million tons a year. In terms of productivity, POSCO was the world's best steel manufacturer throughout the late 1980s and also was at the top in terms of facilities.
Construction of POSCO's Gwangyang Steelworks began in 1982 as the company's second major integrated steel mill, following the pioneering Pohang Works established in the late 1960s and 1970s. The facility was developed across four phases on reclaimed coastal land, achieving full operational capacity with the completion of Phase 4 in 1992.
After the completion of the fourth phase of construction at Gwangyang, POSCO had a total of 20.8 million tons of crude steel production capacity. Of that total, Pohang was producing 9.4 million tons with Gwangyang producing 11.4 million tons. After its completion, Gwangyang Works was the largest integrated steel mill in the world. (1992)
Pohang, previously a fishing port whose major industry was processing fish and marine products, became a major industrial center with almost 520,000 people. In addition to the huge integrated steel mill, Pohang became an industrial complex housing companies that manufacture finished steel products of raw materials provided.
The transformation of Pohang from fishing village to industrial powerhouse mirrors Korea's broader development story. A nation that had been considered too poor and too underdeveloped for heavy industry was now home to the world's most efficient steelmaker.
VI. Institution Building: POSTECH and the Talent Imperative
Park Tae-joon understood that sustainable competitive advantage required more than blast furnaces and rolling mills. His most enduring contribution beyond POSCO itself may be the educational institution he founded.
He also founded POSTECH (leading research university in Korea), the Pohang Steelers soccer team, and the POSCO TJ Park Foundation which was preceded by the Steel Scholarship Foundation.
The late Chairman Tae-joon Park, founder of POSCO, launched the Steel Scholarship Foundation, the predecessor of the POSCO TJ Park Foundation, in January 1971 with seed money of KRW 60 million. This was 2 years before the steel mill first started its operation (July 3, 1973).
That Park founded a scholarship foundation before his first blast furnace even began operations speaks volumes about his priorities. He was building not just a company, but an ecosystem.
The crown jewel of this ecosystem is POSTECH. POSCO CEO Park Tae-joon was quoted as saying, "You can import coal and machines, but you cannot import talent." Park realized the need for Korea to educate their youth in science and technology to ensure Korea's position in the high technology arena. Park founded the Pohang University of Science and Technology (POSTECH) in 1986 as Korea's first science and technology research-oriented university.
In 2012 and 2013, the Times Higher Education ranked POSTECH 1st in their "100 Under 50 Young Universities" rankings.
POSTECH's success demonstrates how corporate investment in education can generate returns far beyond the immediate needs of the sponsoring company. The university has produced generations of Korean scientists and engineers who have staffed not just POSCO, but Samsung, Hyundai, LG, and countless startups.
For investors evaluating companies, the POSCO-POSTECH relationship offers a model of enlightened self-interest. By investing in the broader ecosystem—education, research, regional development—POSCO secured not just talented employees but also a favorable operating environment and social license.
VII. Leadership Transition and Organizational Change (1993-2000)
The departure of a founder who "wielded absolute managerial authority for more than 25 years" inevitably creates turbulence. Park Tae-joon's exit from POSCO in 1993 marked a turning point not just for the company but for Korean corporate governance more broadly.
Changes in managerial systems and organizational structure accelerated in 1993 when POSCO's president and founder, Park Tae-Joon, who had wielded absolute managerial authority for more than 25 years, resigned. With the change in leadership—from Park Tae-Joon to Ryu-Sang Bu, POSCO increased decentralization and diversification. POSCO's management emphasized greater flexibility, autonomy, and consensual decision-making processes. The chairman also moved to devolve more autonomy to the profit centers and changing from a strictly hierarchical organizational structure to one based on teams.
The circumstances of Park's departure were politically charged. After the Kim government was inaugurated in 1993, Park was deprived of his honorary chairmanship of POSCO and indicted for bribe-taking.
After his resignation from the company in 1992, officials in government accused him of embezzlement and he fled to Japan. Cleared of the allegations, Mr. Park later returned and, for several months in 2000, served a brief term as prime minister in the administration of President Kim Dae-jung.
He took office as the chairman in the government of Kim Dae Joong in 2000, but he resigned his spot because the government wrongfully accused him of property fraud. The accusations were later found to be false by a Korean court.
The episode illustrates the risks of state-connected enterprises. POSCO's origins as a government project meant its leadership was always subject to political pressures. When political winds shifted, even a figure as accomplished as Park Tae-joon could be targeted.
For investors, the lesson is clear: political risk is real, even in developed markets, and especially for companies with historical ties to the state. The governance reforms that followed Park's departure—decentralization, team-based structures, professional management—represented necessary adaptations, but they also marked the end of an era.
VIII. Privatization and Global Ambitions (2000-2010)
The Asian Financial Crisis of 1997-1998 forced a fundamental restructuring of Korean capitalism. The chaebol model—with its cross-holdings, relationship banking, and implicit government guarantees—had produced spectacular growth but also spectacular vulnerabilities. POSCO's privatization was part of the comprehensive reforms that followed.
But, the Kim Dae Jung administration following the Kim Young Sam administration listed privatization of public enterprise as a high priority policy in economic policy agenda to implement mainly because of outbreak of the economic crisis. The new administration decided to privatize POSCO and by 1998, the South Korean government had reduced its ownership of shares in POSCO to less than 20%, and more than 58% of the shares in POSCO were in the hands of foreign investors. In 2000, full privatization of POSCO was completed.
As part of the privatization process, new Chairman Lee Ku-Taek began efforts to introduce a professional management and governance system of global standards for POSCO. Under the new governance system, management made accountability to shareholders a priority. POSCO also introduced a new performance-based evaluation and compensation system.
The shift to majority foreign ownership was dramatic and represented a vote of confidence from international investors. By 1998, according to World Steel, POSCO was ranked first internationally, producing 25.6 million metric tons. In 2015, POSCO was listed fourth with 42 million metric tons, behind ArcelorMittal, Hesteel (China), and Nippon Steel.
This was the POSCO that Warren Buffett discovered. POSCO surged on Friday after U.S. investor Warren Buffett's firm Berkshire Hathaway said it owned a 4% stake in the South Korean steel maker as of the end of 2006. Berkshire owned 3.5 million shares in POSCO, the world's third-biggest steel maker, as of Dec. 31, 2006, Buffett wrote to shareholders in a letter out on Thursday. The world's second-richest person after Bill Gates did not comment on POSCO directly, just listing the steel maker among the global companies in which Berkshire has made common investments.
"The Korean stock market a few years ago was by far the most undervalued market in the world," Buffett told the newspaper. "Since then, there has been a huge advance in the Korean market and the [Korean] won has appreciated against the dollar. Nevertheless, many Korean stocks still sell at more attractive prices than stocks in other major countries."
The global expansion that followed privatization extended POSCO's footprint across Asia. It has set up STS production plants at Zhangjiagang Pohang Stainless Steel (China) and POSCO Tai Knox (Thailand), and automotive steel plate production lines (CGL) in Mexico, India, and China. PT Krakatau POSCO was built in 2013 and was the first integrated steel mill in Southeast Asia.
Yet Buffett's eventual exit in 2014 signaled something had changed. But Posco struggled in 2014, Zacks Equity Research reported last week, with weak earnings in the fourth quarter. For the year, its earnings were down nearly 59%. Today, PKX is nowhere to be found in Berkshire Hathaway's portfolio.
The competitive dynamics of the global steel industry were shifting. Chinese production was exploding, creating structural oversupply. The commodity nature of steel made differentiation difficult. POSCO remained efficient, but efficiency alone couldn't offset falling prices and shrinking margins.
IX. The India Saga: A $12 Billion Lesson (2005-2017)
No episode better illustrates the challenges of POSCO's global expansion than the decade-long debacle in Odisha, India. What was announced as India's largest foreign direct investment became a case study in the complexities of emerging market development.
In 2005 the Government of Odisha, a state located in the eastern part of India, signed a memorandum of understanding (MoU) with the Asian steel giant Pohang Iron and Steel Company (POSCO) to build a USD 12 billion steel project in the state. It was slated to be the largest foreign direct investment in India's history. For a relatively backward state, this was no small deal. However, 12 years later, in 2017, the project could not materialize and POSCO has since withdrawn from the project because of several controversies.
Anti-POSCO Movement was a prolonged period of grassroots resistance by local communities, primarily against the establishment of a massive integrated steel plant by the South Korean company POSCO in the Jagatsinghpur district of Odisha, India. The movement, which began around 2005, centered on issues of land acquisition, livelihood displacement, environmental protection, and the rights of traditional forest dwellers. After over a decade of sustained protests, legal battles, and state actions resulting in human rights abuse, POSCO officially withdrew from the project in March 2017.
In June 2005, POSCO India, a subsidiary of South Korean steel-making company POSCO, signed a deal with the Government of Odisha to set up a 12 million tons per annum (MTPA) integrated steel plant and a captive port, with a projected investment of $12 billion. Touted as India's largest foreign direct investment (FDI) at the time, the project required over 4,000 acres of land, largely coastal and fertile, encompassing several villages. The proposed area was densely populated and supported a local economy based on betel vine cultivation, paddy farming, cashew orchards, and coastal fishing. Estimates suggested that the betel vine economy alone sustained around 20,000 people in the affected villages.
After years of intense local resistance, persistent legal hurdles, ongoing controversies surrounding environmental clearances and forest rights, significant delays in land acquisition, and changing global market conditions for steel, POSCO officially announced its decision to withdraw from the project. While initial signals of freezing the project came in 2015-2016, the formal exit was communicated to the Odisha government, and by March 2017, the company effectively pulled out. Reasons cited for the withdrawal included the prolonged delay, the failure to acquire the entirety of the required land, and changes in India's Mines and Minerals (Development and Regulation) Act that affected the assurance of captive iron ore mine allocations for the project.
Mining experts speculate that Posco's non-negotiable stand on getting the captive mine and port was driven by its intention to source iron ore at dirt cheap rates. However, in January 2015, an amendment of the Mine and Minerals Development and Regulation Act put a spanner in Posco's plans. Under the amended law, it was now mandatory for the company to go through the auction route to get its captive iron ore mine. Earlier, the state government had promised to help it obtain the mining licence for free. Thereafter, Posco completely lost interest in the project, which was now as good as dead.
The India experience offers several lessons for investors:
Regulatory Risk: Promises made by one administration can be undone by another. POSCO's business case depended on captive mining rights that subsequent regulatory changes made impossible.
Social License: Large industrial projects require community acceptance. POSCO underestimated the depth of local opposition and the effectiveness of grassroots movements.
Time Value of Money: A 12-year delay turns even attractive projects into value destroyers. The capital tied up in Indian permitting efforts could have been deployed elsewhere.
Yet POSCO has not given up on India. POSCO Group, South Korea's global leader in steel production, and India's leading steelmaker JSW Steel have signed a non-binding Heads of Agreement (HoA) to jointly explore setting up a 6 million tonnes per annum (MTPA) integrated steel plant in India. The agreement marks a significant step toward deepening strategic collaboration between two of the world's most respected steel companies. This HoA builds on the Memorandum of Understanding (MoU) signed by both parties in October 2024 and outlines the broad framework for the proposed 50:50 joint venture. The HoA was signed in Mumbai in the presence of Mr. Lee Ju-tae, Representative Director and President, POSCO Holdings, and Mr. Jayant Acharya, Joint Managing Director & CEO, JSW Steel.
South Korea's largest steelmaker POSCO Group has agreed with JSW Steel Ltd. to build an integrated steel mill with an annual capacity of 6 million tons in India, expanding an earlier plan as the South Asian nation's steel demand continues to surge. The agreement marks a 20% increase from the 5 million tons originally outlined in a memorandum of understanding signed by the two steel giants last October. Under the new heads of agreement, the companies have identified the eastern state of Odisha – home to rich coal and iron ore deposits – as a potential site for the plant.
The approach is fundamentally different this time. Rather than going alone, POSCO is partnering with India's leading domestic player—someone with local knowledge, political relationships, and execution capability.
X. Inflection Point #1: The Holding Company Transformation (2021-2022)
The most significant structural change in POSCO's 54-year history occurred in March 2022, when the company transformed into a holding company structure.
POSCO Holdings Inc., the holding company, will be launched as a listed company on March 2 and help the development of the group's future portfolio, reorganization of the group's businesses and securing of synergy, and lead the overall ESG management of the group. The steel business company that will be established after the physical division will operate a steel production and sales business as a non-listed company that is a 100% subsidiary of the holding company, and retain the company name POSCO.
POSCO held an extraordinary general meeting of stockholders at the POSCO Center in Seoul on January 28 and passed a bill to convert to a holding company structure. In this meeting, 75.6% of stockholders based on the number of stocks with voting rights exercised their vote and the motion passed with 89.2% of the stockholders present. In his greetings, CEO Jeong-woo Choi stressed that "it is necessary to convert to the holding company structure for the group's balanced growth and improvement of corporate value in the rapidly changing management environment."
POSCO Group decided to convert to a holding company structure to survive in a business environment of great uncertainty and lay the foundation to leap into a company lasting a century. It aims to continuously enhance the competitiveness of existing businesses through POSCO Holdings Inc., its holding company, and to establish a management system that enables changes and adaptation by continuously developing and fostering future new businesses. With the new launch of POSCO Holdings Inc. on March 2nd, POSCO Group plans to establish a balanced growth system by improving the competitiveness of each business, creating synergy, enhancing the development and fostering of future new businesses with the holding company at the center.
Launched in March 2022 and anchored on its mission to serve as a future eco-friendly materials provider, POSCO Holdings manages POSCO Group's business portfolio and models corporate governance and environmental, social and governance (ESG) management practices. The group comprises affiliated operating companies representing steel, chemicals, construction and trade industries. The largest operating company is steelmaker POSCO, serving as the backbone of national development for over 5 decades. In addition to steelmaking, POSCO Group focuses on new growth businesses such as rechargeable battery materials and hydrogen.
Since its transition to a holding company structure in March 2022, POSCO Group has aimed to achieve balanced growth and maximize corporate value by focusing on seven core businesses, including steel, rechargeable battery materials, lithium-nickel, hydrogen, energy, construction-infrastructure, and agri-bio.
The structural change reflects a broader strategic reorientation. Through the conversion to a holding company, POSCO plans to be reimagine itself as a "manufacturer specializing in eco-friendly materials" through new growth businesses such as secondary batteries and hydrogen, alongside its traditional steel business.
A distinctive feature of POSCO's governance is worth noting: unlike other Korean chaebols, POSCO does not have a controlling shareholder. Following shareholders' approval of the holding company structure plans, the group will be split off into two entities—Posco Holdings, the new holding company, and Posco, the steelmaking unit wholly owned by the holding firm. The holding company will nurture new growth engine businesses and oversee key management decisions, including investments and R&D activities, while Posco plans to focus on its steel business with a greater emphasis on sustainability.
For investors, the holding company structure creates both opportunities and challenges. The clarity of separating mature steel operations from growth-oriented battery materials businesses aids valuation. But it also introduces complexity and potential for capital allocation conflicts between divisions.
XI. Inflection Point #2: The Battery Materials Pivot
The transformation from steelmaker to materials company represents POSCO Holdings' most ambitious strategic bet—a pivot from an industry that built the company to an industry that could define its future.
POSCO FUTURE M drives the transition to green energy with world-class products and technologies. Rechargeable batteries function when lithium (Li) ions move between the cathode(+) and the anode(-). Because they can be recharged and used repeatedly, rechargeable batteries are embedded in mobility (EVs), IT devices and various home appliances. A rechargeable battery consists of four components: cathode, anode, electrolyte and separator. Among the four, POSCO FUTURE M supplies to the world the most essential components, cathode and anode active materials. We are unique in Korea as a supplier of both cathode and anode active materials.
The strategic rationale is compelling. POSCO's experience serving automotive customers with steel translates to understanding OEM requirements. Its expertise in processing raw materials—iron ore, coal, nickel, chromium, manganese—provides foundation for processing battery minerals. And the company's deep pockets enable the kind of long-term, capital-intensive investments that battery materials require.
Lithium: Building from Scratch
In 2018, POSCO Holdings strategically acquired stakes in a lithium ore mine in Pilbara, Australia, and exclusive lithium brine rights in Argentina to secure multiple stable sources of lithium raw materials.
POSCO Holdings has announced the completion of its lithium hydroxide production plant in Guemes, Salta Province, Argentina, on October 27, as reported by several media reports. A ceremony was held on October 24 at the Hombre Muerto Salt Pan in Salta Province to celebrate the achievement. This facility, which has an annual capacity of 25,000 tons, will produce lithium hydroxide, a crucial material for cathodes used in electric vehicle (EV) battery production. This quantity can support battery production for approximately 600,000 EVs.
With the completion of this new plant, POSCO Holdings' annual lithium hydroxide output capacity now reaches 46,500 tons. This includes the output from POSCO Pilbara Lithium Solution's plant at the Yulchon Industrial Complex in Gwangyang, South Jeolla Province, which produces 21,500 tons of lithium hydroxide from lithium ore.
As of 2024, POSCO Holdings has secured a lithium production capacity of 68,000 tons annually, with the completion of facilities producing 25,000 tons of brine lithium in Argentina and 43,000 tons of ore lithium.
In lithium, we will grow to be global top 3, buttressed by diverse resource base and tailored processes. In Nickel, our low-carbon technology, global production base and strategic partnership will drive our competitiveness. We will scale our annual production capacity to 96,000 tons of lithium and to 48,000 tons of nickel by 2026.
Cathode and Anode Materials: POSCO Future M
POSCO Future M has announced its 2024 consolidated financial results, reporting revenue of KRW 3.6999 trillion and an operating profit of KRW 700 million.
The anode materials business saw a decline in natural graphite anode sales volume due to competition from low-cost Chinese products, while sales prices fell in line with dropping graphite raw material costs. The artificial graphite anode segment also recorded inventory valuation losses due to high initial manufacturing costs, resulting in a 30.4% year-over-year revenue decrease.
Meanwhile, POSCO Future M is implementing an emergency management system to prepare for post-chasm growth. With market demand contracting and global policy uncertainties at unprecedented levels, including the inauguration of a new administration in the key U.S. market, POSCO Future M plans to secure business competitiveness and prepare for future growth through a proactive crisis response.
North American Expansion: The GM Partnership
An overview of the cathode material plant under construction by POSCO Future M and General Motors (GM)'s joint venture Ultium CAM in Quebec, Canada. POSCO Future M has decided to commence operations at its Canadian cathode production base, Ultium CAM, from October next year, judging that the chasm in the secondary battery market is nearing its end. According to industry sources on Oct. 19, POSCO Future M has recently confirmed the initial operation date of Ultium CAM in Canada for late October next year. Ultium CAM is a joint venture established in Quebec, Canada, with POSCO Future M and General Motors (GM) investing a total of 1.4 trillion won with an 85:15 equity ratio.
It is equipped with facilities capable of producing 30,000 tons of high-nickel cathode materials annually, sufficient to supply 500,000 electric vehicles. All cathode materials produced here will be supplied to Ultium Cells, the U.S. cell joint venture between LG Energy Solution and GM.
POSCO Future M has encountered new opportunities as concerns over the supply chain for natural graphite anode materials grow due to intensifying U.S.-China trade disputes. China has added anode materials and anode production equipment to its export permit list, raising concerns about supply chain collapse as all top 10 global anode material shipment companies last year were Chinese. POSCO Future M is the only non-Chinese company capable of producing natural graphite anode materials, creating conditions to secure numerous contracts with global automakers.
The battery materials pivot represents a fundamental bet: that the skills that made POSCO great in steel—process engineering, scale manufacturing, raw material management—will translate to a new industry. The jury is still out, but the strategic logic is sound.
XII. Inflection Point #3: Hydrogen and Green Steel Strategy
The steel industry accounts for approximately 8% of global carbon emissions, making decarbonization both an existential challenge and a potential competitive advantage. POSCO has committed to being at the forefront of this transition.
At POSCO we are incredibly focused on the reduction of emissions from the steel making process and have committed to reducing worksite emissions by 10% by 2030, 50% by 2040 and being 100% carbon neutral by 2050.
South Korea's POSCO Group is preparing to produce carbon-neutral steel, using hydrogen instead of fossil fuels such as coal and natural gas, which the company expects to reduce carbon emissions by up to 90%. Next year, it will break ground on a pilot facility for hydrogen-based steelmaking with an annual capacity of 300,000 tons at its Pohang steel complex. Scheduled for completion in 2026, it will begin the test production of low-carbon steel. POSCO said the pilot plant will be the world's first of its kind to use fluidized bed reduction reactors (HyREX) and widen its gap with rival steelmakers. It aims to reach carbon neutrality by 2050.
"POSCO significantly cut the production process of hydrogen reduction steelmaking and costs through process innovation," said Bae. "We are confident that HyREX will become the global standard." POSCO plans to break ground on a full-scale hydrogen reduction steelmaking facility with an hourly production capacity of 36 tons in the first quarter of next year with a target completion of 2027 and commercialization by 2030. The company is poised to increase research staff and engineers for the technology as it aims to produce 2.5 million tons of steel by 2040 and all products only with hydrogen by 2050.
Hydrogen-based steelmaking technology pioneered by POSCO was designated as a national strategic technology in February 2024.
Upon completion of the project in 2050, including POSCO's Gwangyang hydrogen-based steelmaking project, a total investment effect of 40 trillion won is forecasted, along with the achievement of carbon neutrality in the steel industry through hydrogen-based steelmaking technology.
POSCO said the hydrogen reduction steelmaking costs are more than 30% higher than those of the existing production. No matter how much carbon the company cuts for steel production, few customers will be able to afford such higher costs, industry sources said. Cutting steelmaking costs requires lower hydrogen production expenses with new technology and renewable energy, POSCO said. The company plans to reduce production costs through process innovation and economy of scale.
The hydrogen strategy faces real challenges: cost, energy supply, and the pace of customer adoption. But it also represents a potential source of long-term competitive advantage if POSCO can commercialize the technology before competitors.
XIII. Current Financial Position and Recent Performance
POSCO Holdings entered 2024 facing multiple headwinds: sluggish steel demand, Chinese oversupply, and falling prices for key minerals. The financial results reflect these challenges.
In 2024, POSCO's sales revenue decreased by 5.7 percent year on year to KRW 72.68 trillion ($50.25 billion), while its net profit amounted to KRW 948 billion ($655.55 million), decreasing by 48.6 percent compared to a net profit of KRW 1.84 trillion in 2023.
Last year, POSCO produced 33.17 million mt of crude steel, falling by 1.1 percent compared to the previous year, while its finished steel sales decreased by one percent year on year to 32.8 million mt. The declines in production and sales were due to blast furnace refurbishment.
The deterioration of the domestic and international business environment, such as sluggish domestic and international steel demand, oversupply of steel by China, and falling prices of key minerals, affected the performance of the steel and rechargeable battery materials business last year. In addition, non-cash losses of KRW 1.3 trillion, including one-time impairment losses from preemptive restructuring of low-yield assets and the process of increasing business efficiency, and valuation losses due to deteriorated market conditions.
POSCO Holdings announced its first quarter results with consolidated sales of 17.437 trillion won, an operating profit of 568 billion won, and a net profit of 344 billion won. Despite deteriorating business conditions due to global tariff wars and economic uncertainties, sales decreased by approximately 2.1% compared to the previous quarter. Still, operating profit increased by 473 billion won compared to the prior quarter, improving performance and restoring operating profit to the level of the same period last year.
Market Valuation
POSCO Holdings has a market cap or net worth of $15.47 billion as of September 12, 2025. Its market cap has decreased by -21.59% in one year.
Market Cap $17.598B; Shares Out 323.73M; Dividend Yield 3.29%; P/E (TTM) 50.78; EBITDA (TTM) $4.076B; ROE (TTM) 0.82%; Revenue (TTM) $47.755B.
Shareholder Returns
POSCO Holdings has committed to retiring 6% of its treasury shares over three years and retired 2% in 2024.
The company also pledged a robust shareholder return policy, including the incineration of approximately KRW 2 trillion worth of its shares over the next three years and the immediate incineration of future share purchases.
Restructuring Initiatives
In 2023, POSCO Group completed 45 out of 125 low-yield business and non-core asset restructuring projects, generating KRW 662.5 billion in cash, and plans to complete an additional 61 projects by the end of this year to secure a cumulative total of KRW 2.1 trillion in cash from 106 projects. It will increase asset efficiency and be a financial resource for future growth investments.
XIV. Competitive Position and Strategic Analysis
Porter's Five Forces Analysis
Supplier Power (Moderate): Iron ore and coking coal suppliers are concentrated among major mining companies (BHP, Rio Tinto, Vale), giving them pricing power. However, POSCO's vertical integration into lithium and nickel provides some buffer.
Buyer Power (High): Major customers—automakers, shipbuilders, construction companies—are themselves large corporations with negotiating leverage. Steel's commodity nature limits differentiation.
Competitive Rivalry (Intense): The global steel industry features numerous large players, significant Chinese overcapacity, and relatively undifferentiated products. This dynamic pressures margins industry-wide.
Threat of Substitutes (Moderate): Aluminum and composites can substitute for steel in some applications, particularly automotive. The shift to EVs creates both threats (lighter vehicles may use less steel) and opportunities (battery materials).
Threat of New Entry (Low in steel, Moderate in battery materials): The capital requirements and technical expertise for integrated steelmaking create substantial barriers. Battery materials, while capital-intensive, have lower barriers and more new entrants.
Hamilton Helmer's Seven Powers Framework
Scale Economies: POSCO benefits from significant scale in steel production, with Pohang and Gwangyang among the world's largest integrated mills. However, scale advantages have eroded as Chinese competitors have built even larger facilities.
Network Economies: Limited applicability in commoditized steel production.
Counter-Positioning: POSCO's battery materials pivot represents classic counter-positioning—incumbents in cathode/anode materials (largely Chinese) face dilemma of cannibalizing domestic supply chains to compete globally.
Switching Costs: Relatively low in commodity steel; potentially higher in specialized battery materials where qualification and testing create customer stickiness.
Branding: Limited pricing power from brand in commodity steel; POSCO's reputation for quality and reliability provides some advantage in technical applications.
Cornered Resource: Lithium brine rights in Argentina and partnerships in Australia represent potentially valuable cornered resources if battery demand materializes as projected.
Process Power: POSCO has been ranked the world's most competitive steelmaker for 15 consecutive years by World Steel Dynamics (WSD). This operational excellence represents genuine process power, though China's scale investments have narrowed the gap.
Competitive Comparison
| Metric | POSCO Holdings | ArcelorMittal | Nippon Steel |
|---|---|---|---|
| Crude Steel Output | ~33 MT | ~70 MT | ~44 MT |
| Revenue | ~$50B | ~$68B | ~$55B |
| Battery Materials | Major focus | Limited | Limited |
| Hydrogen Steel | HyREX technology | Partnership approach | Partnership approach |
| Geographic Focus | Asia/Americas | Global | Asia-Pacific |
XV. Bull Case and Bear Case
The Bull Case
Battery Materials Optionality: If EV adoption accelerates as projected, POSCO's integrated battery materials supply chain—from lithium extraction through cathode/anode manufacturing—positions it as a critical supplier to global automakers. POSCO Future M is the only non-Chinese company capable of producing natural graphite anode materials, creating conditions to secure numerous contracts with global automakers.
Green Steel Pioneer: First-mover advantage in hydrogen-based steelmaking could create significant competitive moat if carbon border adjustment mechanisms (like EU's CBAM) penalize carbon-intensive competitors.
India Growth: Partnership with JSW provides second chance at accessing world's fastest-growing major steel market without the go-it-alone risks that doomed the Odisha project.
Valuation Discount: POSCO Holdings is undervalued, trading at less than half its tangible book value, despite consistent profitability and a strong balance sheet.
Shareholder Returns: Commitment to 6% treasury share retirement plus dividends provides yield support while investors wait for growth optionality to materialize.
The Bear Case
Chinese Oversupply: Structural overcapacity in Chinese steel continues to pressure global prices. Until Chinese production rationalizes, industry margins remain constrained.
Battery Materials Chasm: The EV market is experiencing a "chasm" period where demand has slowed while supply investments accelerate. POSCO Future M recorded a net loss of KRW 231.3 billion after recognizing impairment losses to proactively reflect business conditions and enhance asset soundness.
Execution Risk: The transformation from steelmaker to materials company requires capabilities in chemicals, mining, and precision manufacturing that differ substantially from blast furnace operations.
Capital Intensity: Both green steel and battery materials require massive capital investments over long periods before generating returns. The hydrogen strategy alone could require 40 trillion won by 2050.
Geopolitical Risk: South Korea's geopolitical position—dependent on China for trade, allied with the US for security—creates exposure to US-China tensions affecting both steel and battery materials businesses.
XVI. Key Performance Indicators to Track
For long-term investors monitoring POSCO Holdings, three metrics deserve particular attention:
1. Lithium Production Volume and Cost
As the company's battery materials strategy depends fundamentally on securing upstream raw materials, tracking lithium production ramp-up against targets provides the clearest indicator of strategic execution. The current target is 96,000 tons by 2026. Watch for quarterly updates on Argentina and Australia production levels, as well as any expansion announcements.
2. Battery Materials Revenue Mix and Margin
The percentage of consolidated revenue from rechargeable battery materials (currently reported as part of Green Materials and Energy segment) indicates transformation progress. More importantly, margin evolution in this segment reveals whether POSCO can achieve profitability as scale increases. Watch for POSCO Future M's quarterly results and any commentary on cathode/anode pricing power.
3. Steel EBITDA per Ton
As a capital-intensive commodity business, steel profitability ultimately depends on margin per unit produced. This metric captures both pricing power and operational efficiency. Comparing POSCO's EBITDA/ton to competitors like Nippon Steel and ArcelorMittal reveals relative competitive position.
XVII. Conclusion: From Rice of Industry to Materials of Tomorrow
The story of POSCO is inseparable from the story of modern South Korea. A company founded when the nation had no steel industry, built with war reparations from a former colonizer, led by a general who demanded perfection from construction crews working through monsoon nights. That company became the world's most efficient steelmaker, spawned a top research university, and helped enable Korea's rise as an industrial power.
Now POSCO Holdings faces a transformation as profound as its founding. The steel that built Korea must give way—or at least share the stage—with the lithium, nickel, and cathode materials that will power the electric vehicle revolution. The blast furnaces that defined industrial modernity must evolve into hydrogen-powered facilities that can produce steel without carbon.
The company's advantages are real: operational excellence honed over decades, deep pockets for long-term investments, established relationships with global automakers, and a workforce accustomed to building world-class facilities in challenging conditions. The Argentina lithium plant, completed in October 2024, demonstrates that POSCO can execute complex resource projects far from home.
But the challenges are equally real. Chinese competitors in both steel and battery materials enjoy scale and cost advantages. The EV transition is proving bumpier than optimists predicted, with the "chasm" creating near-term pain for battery materials producers. The capital requirements for green steel are staggering, and the willingness of customers to pay premiums for low-carbon steel remains uncertain.
For long-term investors, POSCO Holdings presents a compelling puzzle. The current market valuation implies deep skepticism about the transformation strategy—the stock trades at less than half tangible book value. If the battery materials business achieves scale profitability and green steel technology proves commercially viable, there is significant upside. If Chinese overcapacity persists and the EV transition disappoints, there is meaningful downside despite apparently cheap valuation.
What seems clear is that POSCO Holdings is not standing still. The holding company transformation, the battery materials investments, the hydrogen steel technology, the India partnership—all represent management teams betting aggressively on transformation rather than managing for decline.
Park Tae-joon built POSCO by believing that Korea could do what experts said was impossible. His successors are betting that a steelmaker can become a materials company, that a carbon-intensive industry can become carbon-neutral, that a national champion can become a global player in the industries of tomorrow. Whether they succeed will determine whether POSCO's next fifty years match its first—or whether the company that helped build a nation becomes another victim of industrial disruption.
This analysis is provided for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions.
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