Firms strive to get closer

Nippon Steel Corp, the world's second-largest steelmaker, and South Korea's Posco are considering ways to expand their alliance as mills seek to cut soaring raw material and shipping costs.

The Japanese company may make more steel with Pohang-based Posco, said a Nippon Steel spokesman, responding to a report in yesterday's Nikkei newspaper. The South Korean mill would seek ways to expand joint investments and technology development, a spokesman said.

Nippon Steel and Posco have reached an agreement to make more steel jointly in response to expansion by ArcelorMittal, the world's biggest producer, the Nikkei reported, citing Nippon Steel President Akio Mimura.

The two Asian steelmakers hold shares in one another to help boost their defenses against hostile bids. Nippon Steel, based in Tokyo, said on October 22 it would form a joint venture with Posco to recycle iron products as it expands overseas through cooperation with rivals rather than by buying competitors.

Posco and Nippon Steel said in October last year they would spend more than $900 million to raise their stakes in each other. The Japanese mill would buy 2 percent of Posco to bring its stake to 5.32 percent, and Posco will raise its stake in Nippon Steel to 3.81 percent by March 31, they said at the time.

Bloomberg News

(China Daily 11/14/2007 page16)