Posco and China's Chongqing Iron & Stee Sign Joint Investment Agreement

Posco, a South Korean steelmaker and the Chinese steelmaker Chongqing (Chongqing) have signed a memorandum of understanding to implement joint investment projects worth about $ 3.3 million, the South Korean Ministry of Commerce said in a statement.

The MOU will address a wide range of issues, including a steelmaking technology known as Finex for cold rolled steel and a mining system developed by Posco itself, the ministry said.

In addition, Posco said it agreed to build a steel plant through a joint venture with West China Chongqing (50-50) with a production capacity of around 3 million tonnes of steel per year. The two companies agreed to start construction in September.

Chongqing shares surged as much as 10 percent in Shanghai after the South Korean government announced a mining and production technology agreement with its largest steelmaker. Chongqing suffered its biggest annual losses last year since 1997 due to overcapacity in industry and a slowdown in economic growth amid falling steel prices.

Chongqing is state-owned and is also seeking private investors for its iron ore project in Australia. Chongqing Iron & Stee Group has agreed to acquire an iron ore facility in Western Australia. Development of production and the first phase of the project may require an investment of about $ 2 billion. Premier Li Keqiang strives to attract private capital to state-controlled industries and accelerate the development of mixed-ownership entities.