Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Koreans Sign $12Bln Steel Deal

SEOUL, South Korea -- POSCO, the world's fifth-largest steelmaker, said on Wednesday it had signed a deal for a $12 billion Indian steel project, the biggest foreign direct investment in India.

The South Korean steelmaker has been looking to bolster its overseas presence -- particularly in China and India, where demand for steel is booming -- as its domestic demand peaks.

Under the terms of the agreement, $3 billion will be invested initially between 2007 and 2010 to build a 3 million-ton plant, which will start production in 2010, POSCO said in a statement.

The project involves building a 12-million-ton steel plant, a 30-million-ton iron ore mine, a mill for making hot-rolled coil as well as a seaport.

The government of India's Orissa state also granted POSCO mining lease rights for 30 years to supply a total of 6 million tons of iron ore to the new plant, the firm said.

However, it was not immediately clear whether POSCO and Orissa state had reached an agreement to let POSCO swap exports of low-grade iron ore for imports of high-grade ore.

Allowing POSCO to export the iron ore has been the main obstacle to the steel plant deal in Orissa.

Steel demand in India, Asia's fourth-largest economy, is rising as investment in infrastructure increases and demand soars for housing and durables such as cars and consumer goods.

Global steel-making and mining firms have warmed to India's steel industry due to its affordable labor and the world's third-largest deposits of coal and iron ore.

Mittal Steel, the world's leading steelmaker, is among other global players to have expressed an interest in setting up production facilities in India, which has a per capita steel consumption of just 30 kilograms, compared with China's 180 kilograms.

But India has struggled to attract foreign money, while economic advances in neighboring China draw huge piles of capital.

India received just over $4 billion in foreign direct investment in the first 10 months of the year to March, compared with $50 billion in FDI for China.

Shares in POSCO closed down 0.27 percent on Wednesday to 183,500 won ($182), versus a 1.23 percent rise in the broader market.