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Steel giant Posco eyes biopharma

Chairman Kwon says growth of nonsteel sector crucial for steelmaker’s next 50 years

To drive another successful 50 years, South Korean steel giant Posco will seek new business opportunities in nonsteel sectors by investing in emerging technologies like lithium and biopharma, its chief said.

At a meeting with Korean reporters Saturday on the occasion of the steel giant’s 50th anniversary, Posco Chairman Kwon Oh-joon said the company has recently “set a direction to commercialize biopharmaceutical studies.” The new undertaking will be based on researches carried out at Postech, a science- and engineering-oriented university the steelmaker established 32 years ago.

While refraining from suggesting possible development of new bio drugs, the steelmaker will rather focus on developing diagnostic kits in use of information and communication technology and big data, as well as contract manufacturing of biopharmaceutical products like Samsung BioLogics, the chief said.

Posco Chairman Kwon Oh-joon (Posco)
Posco Chairman Kwon Oh-joon (Posco)

“One of the most successful cases in the bio industry is Samsung BioLogics, but I don’t think it’s a biopharma company. It’s a manufacturing company operating based on (Samsung’s experience in) chip engineering,” he said. 

“Posco is also a manufacturing company. So we are looking into Samsung BioLogics’ business model,” he said, without elaborating on the size of investment it plans. They are taking a “cautious approach” on developing new drugs that would take more than 10 years of research and hefty investment, he added.

The steelmaker is confident on its new business direction, touting Postech’s research capability and its international reputation as a leading education institution for world-class scientists.

Established in 1986, Postech was ranked No. 3 among the world’s best small universities last year, following California Institute of Technology in the US and Ecole Normale Superieure in France, according to the Times Higher Education.

The Pohang-based college has been leading the field of biopharmaceutical research in South Korea. One of the scholars is Dr. Sung Young-chul, founder of Genexine, a Korean vaccine maker in clinical trials for the treatment of HPV-induced and nonsurgical cervical cancer. The market value of the Kosdaq-listed vaccine company is estimated at 2.1 trillion won ($1.97 billion).

Postech, with the assistance of state funds, has also built the world’s third fourth-generation Pohang Light Source, a cutting-edge synchrotron radiation facility capable of unlocking the mystery of gene particles. The other two are in the US and Japan.

It is linear-shaped and stretches 1.1 kilometers, the longest among the fourth-generation synchrotron radiation facilities. And Posco will be given priority in accessing the facility, an official said.

Posco entering biopharma industry is part of its big picture for the future. Celebrating its semicentennial event this week, Posco plans to diversify its businesses by increasing investment on infrastructure development and the nonsteel sector.

The engineer-turned-CEO said he would turn the 50-year-old steelmaker into an energy-to-ICT firm with an aim to generate 500 trillion won in sales and 70 trillion won in operating profit by 2068.

Last year, Posco saw 60.6 trillion won in sales with 4.6 trillion won in operating profit from its portfolio currently concentrated in the steel business. About 80 percent of its profit comes from Posco‘s steel and related businesses.

Seeking future growth vehicles, the company has been investing in lithium business to cater growing demand for rechargeable batteries. But the key is to secure resources first.

“We have exclusive technologies (to produce lithium) but not enough raw materials,” he said, highlighting that the level of Posco’s technology on lithium extraction has reached 90 percent, but only 5-10 percent in terms of size of secured resources.

After years of negotiation, Posco won electric battery business in Chile in a joint venture with South Korean battery maker Samsung SDI. The venture will produce 3,200 metric tons of cathode materials for electrified vehicles, starting in the second half of 2021.

The chairman said more joint ventures or mergers and acquisitions will be key to solidify its lithium business.

“I think our Argentina project will get on track soon,” he said, referring to the delayed plan to build a lithium extraction plant in the South American country.

Chinese companies, back by massive state funds, have jumped into the lithium race, inflating the market prices of raw materials, he said. “We have had numerous negotiations, but failed to win contracts as they all went to Chinese companies blocking (our) deal with money,” he said. “But the market fever has subsided. ... The people in Argentina (interested in) our competitiveness (in lithium extraction technology) have been contacting us to revive the talks.”

The chairman was referring to a high-efficiency lithium extraction technology that cuts recovery time from around 12 months to just eight hours. It also requires less space than the traditional evaporation technique. Kwon led the development team seven years ago, before taking the top post.

Posco plans to see 17 trillion won in sales by 2030 from secondary battery businesses including lithium.

By Cho Chung-un (
Korea Herald daum