Signs agreement for 200,000-ton sales in 2025; commits to overcoming intensifying market competition together

On September 23, Krakatau POSCO held a ceremony at the Langham Hotel in Indonesia to commemorate achieving cumulative sales of 1 million tons to Intisumber, Indonesia’s largest steel distributor. This marks the first time the company has reached cumulative sales of 1 million tons to a single customer since its founding.

▲Krakatau POSCO held a ceremony on September 23 at the Langham Hotel in Indonesia to commemorate 1 million tons of cumulative sales to Intisumber and presented an appreciation plaque. From left: Intisumber CEO Edward, Krakatau POSCO President Bumsu Jung.

At the event, Krakatau POSCO invited Intisumber CEO Edward and executives, with President Bumsu Jung and Purchasing and Marketing Deputy Director Kyung-nam Kim in attendance to present an appreciation plaque.

Established in 1978, Intisumber is Indonesia’s largest distributor, with processing centers and warehouses in critical regions. Krakatau POSCO has built a strategic partnership with Intisumber since starting operations in 2013, selling hot-rolled steels and plate steels. Notably, the 1 million tons of cumulative sales achieved today is equivalent to stacking plate products 1500mm wide and 1000mm long to the height of Mount Everest, the world’s tallest peak.

President Bumsu Jung said, “It has been an honor to grow together with Intisumber for 12 long years since our first connection in 2013. There have been many challenges, but we achieved 1 million tons in cumulative sales because you believed in us and stayed with us. Krakatau POSCO will continue to provide unwavering support for Intisumber’s growth as Indonesia’s largest distributor.”

Intisumber CEO Edward stated, “We are grateful to Krakatau POSCO ‘s employees for consistently supplying the highest-quality products on time. We hope to continue cooperating to contribute to developing Indonesia’s steel industry and steadily increase our transaction volume to 2 million, 3 million tons, and beyond.”

▲Krakatau POSCO signed an agreement with Intisumber for annual sales of 200,000 tons in 2025 at the Langham Hotel in Indonesia on September 23. From the fourth right: Intisumber CEO Edward, Krakatau POSCO President Bumsu Jung.

Additionally, Krakatau POSCO and Intisumber signed an agreement for annual sales of 200,000 tons in 2025. They committed to cooperating based on their strong trust to overcome challenging steel market conditions in the Indonesian steel market, where competition is intensifying with the operation of new hot strip mills.

Reflects Positive Evaluation from Global Investors on Stable Profitability and Strategic Importance within the Group

$300 Million in 3-Year Bonds and $400 Million in 5-Year Bonds with an Interest Rate of 6.375%, Totaling $700 Million

POSCO’s Indonesian joint venture, PT Krakatau POSCO, successfully issued global bonds totaling $700 million on May 30. The dual-tranche bonds consist of $300 million with a 3-year maturity and $400 million with a 5-year maturity. This marks the first instance of a POSCO Group affiliate issuing global public bonds based on its own credit rating, independent of POSCO. The bonds have an interest rate of 6.375% for both maturities, and the funds raised will be used to repay existing debt.

* Dual-tranche: Issuing two bonds simultaneously with different maturities or interest terms.

PT Krakatau POSCO is an integrated steel mill jointly formed by POSCO and Indonesia’s state-owned steel company, Krakatau Steel, in 2010. It currently operates one blast furnace with a production capacity of 3 million tons, along with hot rolling and heavy plate mills. The successful bond issuance by a local steel company in Southeast Asia, a region with relatively high country risk, is attributed to stable performance and the strategic importance of the project in the group’s overseas operations.

PT Krakatau POSCO has reported operating profits for three consecutive years, making it the third most significant entity in the group following POSCO International. On May 17, the international credit rating agency Standard & Poor’s (S&P) said in a report, “PT Krakatau POSCO is expected to maintain a solid market position and stable profitability in Indonesia. Considering its substantial role and investment scale in the group’s overseas operations, it is deemed a strategically important subsidiary.” S&P assigned a BBB- (stable) credit rating to its unsecured U.S. dollar bonds.

These points were emphasized during global investor presentations for the bond issuance. PT Krakatau POSCO announced its intention to issue global bonds in the Asian market on May 17, and began investor recruitment. From May 20, investor presentations were held in Singapore, Hong Kong, and London. POSCO, the parent company, also participated in these presentations to support PT Krakatau POSCO.

Ultimately, the bond issuance attracted 191 global institutional investors, with orders amounting to approximately $4.9 billion, nearly seven times the final offering amount. As a result, 80% of the bonds were allocated to Asian investors, while European and Middle Eastern investors received 20%.

Hello. My name is Meti Adianti Subarja, and I am a Korean interpreter at the Krakatau POSCO coke plant in Indonesia. I joined the company in 2018, and now, six years into my career, I reflect on the initial days. The unfamiliar environment was intimidating, but I adapted well, thanks to my leaders’ and colleagues’ support. Last year, I was honored as an excellent member in our foreign subsidiary and visited Korea for the first time through the Global P.A.L.^* program, a dream come true. Let me share my life at Krakatau POSCO (hereafter PT.KP), where I strive to create positive changes with a ‘can-do’ attitude.

*Global PAL: A unique educational program to enhance Pride, Appreciation, and Loyalty among talented individuals in POSCO Group’s overseas subsidiaries.

Friday, September 16, 2019, is a day I’ll never forget – the day I became a regular employee at PT.KP. HR asked me to bring my favorite pen. Puzzled, I went with my usual pen and was handed the official employment contract. Holding back tears of joy, I signed my first full-time employment contract.

For someone like me, who had never been abroad, to learn the language of a country I had never visited and to secure a position in a global corporation – it truly felt like a miracle had occurred. Most importantly, having grown up in a challenging family situation, the fact that I secured a stable job and escaped an uncertain life filled me with immense gratitude. Signing that contract and stepping out of the office, I immediately called my mother. Hearing her joyous voice, I couldn’t hold back my tears anymore. Recalling that moment brings emotions to the surface, serving as a beacon during tough times.

The highlight of my journey was my first visit to Korea last November after I had been honored as an excellent member in the Global P.A.L. program. I never imagined being selected for such an honor. I enjoyed my work, feeling grateful for the environment that allowed me to challenge and grow. The reality of visiting Korea, a long-held dream, felt surreal until I boarded the plane.

During my five-day stay in Korea, I visited the Pohang Steelworks and immersed myself in various Korean cultural experiences, creating precious memories with my colleagues. The visit to POSCO left a deep impression on me with its massive infrastructure and rich history of steelmaking. The story of restoring the damages from Typhoon Hinnamnor in just 135 days, which I had read about in POSCO Today(POSCO Group’s in-house communication chaneel), resonated more deeply when I saw the recovery photos on-site.

During my stay, I also had the opportunity to wear traditional Korean Hanbok and visit the Gyeongbokgung Palace. It felt like stepping into the shoes of a protagonist from Korean history. It reminded me of ‘Jewel in the Palace,’ my first historical drama.

Though it was a brief visit, the memories of Korea remain vivid. I want to take this moment to express my gratitude to the POSCO Group for granting me this cherished opportunity to visit Korea. Visiting POSCO and the Future M plant in Korea and witnessing the dedication and effort that transformed a barren land into a major corporation was profoundly inspiring. These emotions will be treasured as I excel in my interpreting role at PT.KP, contributing to its notable achievements.

As an interpreter, my role bridges the linguistic gap between Korean staff and local employees, often mitigating misunderstandings. Given the nature of our local subsidiary, expatriates face challenges in communicating in Indonesian, and local staff aren’t typically fluent in Korean or English. Hence, there is a need for interpreters like me. It’s not just about translating words; it involves understanding the context and ensuring accurate communication. This requires a grasp of the language and a deep understanding of cultural nuances and technical terminology.

Especially with technical terms, understanding the operational processes is crucial. There were times when I realized my limitations while communicating complex processes and thus dedicated myself to studying them. I recall an early incident in my career when the plant manager said, ‘Let’s go to the Yeonju (연주).’ I followed, wondering why there were no musicians or dancers, as I thought ‘Yeonju’ meant a performance. It turned out to be the Continuous Casting section of the steelmaking department. It’s a funny story now, but it was quite a confusing experience back then.

It’s been 15 years since I started learning Korean in 2009. I’m continually studying to enhance my proficiency for smoother communication. Keeping up with trends is essential, too! I actively follow social media and watch dramas and variety shows on Netflix to quickly pick up on new Korean slang and idioms.

At PT.KP, we often mix Korean and Indonesian slang. For instance, I might tell an Indonesian global staff member, ‘Matjeomhae!’ (Enjoy your lunch!) during lunchtime, or ask the plant manager on a Friday morning, ‘Do you have any fun plans for bulgeum (exciting Friday)?’ Conversely, the plant manager might say to us, ‘Semuanya markipul, samjube,’ a mix of Indonesian phrases meaning ‘Let’s all go home now, see you tomorrow.’ Our plant manager has quite a sense of humor! Such expressions contribute to a harmonious office atmosphere.

In my five years as an interpreter, I owe my growth to the unwavering support of my colleagues and leaders in the Coke Plant Equipment team. In my early days, like wandering in a maze, I grappled daily with unfamiliar field jargon and administrative duties. Their patience and encouragement, never rushing or pressuring me, enabled my development. My gratitude towards all the leaders in the Coke Equipment team is profound and beyond words.

Observing the leaders tackle challenges head-on has been instrumental in shaping my values around leadership and mentorship in the workplace. I intend to generously share the invaluable wisdom and skills I’ve learned from them. To all my mentors, thank you!

As an ENFP in the Myers-Briggs typology, I draw energy from social interactions. Yet, intriguingly, my hobbies are the polar opposite. I relish solitary pursuits like cooking, video editing, and drawing.

Preparing meals for loved ones, setting the table, and seeing everyone enjoy the food fills me with immense joy. Video editing, another passion, is a creative endeavor that melds moments into a visual narrative. It’s a process that allows me to reflect on my experiences and reminds me of the happiness in my life, fostering gratitude for the everyday.

What I really want to achieve!

POSCO saw improvement in its performance with 12.8574 trillion won in sales and 678.5 billion won in operating profit on a consolidated basis.

Although the construction and energy sectors showed a slight decrease in sales and operating profit, steel, ICT and other materials exhibited overall improvement, leading to an increase in sales and profit in those sectors by 3.2% and 2.8%, respectively. The operating profit margin amounted to 5.3%, remaining at the same level as the previous quarter.

In particular, the operating profit in the steel sector, which includes the combined profit of overseas steel subsidiaries, increased 33.1% from the previous quarter to make a profit during the second quarter. The overseas steel subsidiaries, which had an overall deficit of 399.1 billion won last year, reduced the deficit to 42.3 billion won in the first quarter and raised 10.6 billion in the second quarter, resulting in an increase of 52.9 billion won from the previous quarter.

Zhangjiagang Pohang Stainless Steel (ZPSS), the manufacturer of STS in China, has realized profit for the second straight quarter thanks to an increase in the prices of raw materials, including nickel. PT. Krakatau POSCO in Indonesia and POSCO SS-VINA in Vietnam have largely reduced their deficit as well.

Recorded profit margin is currently at 11.9%, the highest in four years, thanks to the increased sales ratio of high quality steel (on a parent basis)

In terms of parents, POSCO posted 6.96 trillion won in sales and 712.7 billion won in operating profit, up by 4.2% and 22.4% respectively from the previous quarter. It posted 310.5 billion won in net income during the term, down by 30.4%, due to asset impairment caused by the decrease in the value of their stock holdings and losses on valuation of foreign debt caused by exchange fluctuations.

The operating profit margin for parents amounted to 11.9%, up by 1.8% from the previous quarter, which is the highest since the second quarter of 2012. This was driven by the sales and price increase of World Premium (WP) products. It can also be considered a result of the enhanced competitiveness in basic steelmaking, as the company has actively implemented a marketing solution designed to satisfy the needs of customers from the manufacturing stage to the selling stage.

The sales volume of WP products reached 3.839 million tons, up by 157K tons from the previous quarter. WP products accounted for 45.2% of total product sales, an increase of 0.7% from the previous quarter.

Completed 81 cases of restructuring of assets and subsidiaries since 2014

The company’s overall financial health is steadily improving as well. It recorded 75.9% in debt-to-equity ratio on a consolidated basis, the lowest since 2010, and 19.2% on a parent basis, the lowest since its founding.

Relevant innovation within the business structure, which has been underway since 2014, is being carried out smoothly. The company has completed 45 subsidiary restructuring cases from 2014 up to the first half of this year, which includes the cases completed during the second quarter. An example of such a case is the merger between POSCO AST and POSCO P&S. Eighty-one cases, which include 36 asset restructuring cases, have been completed so far out of a total of 149 cases, with the overall restructuring target to be achieved by 2017. POSCO will restructure 28 domestic and overseas subsidiaries and 13 assets during the second half of this year.

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On April 21, POSCO held an Investor Relations (IR) conference call to announce improved operating performance of its first quarter.

Although POSCO recorded KRW 12.46 trillion in revenue in the first quarter on a consolidated basis, which is a slight decrease from the previous quarter, it recorded KRW 659.8 billion in operating profit, KRW 319.3 billion up from the previous quarter, and KRW 352.5 billion in net income during the term,  KRW 243 billion up from the previous quarter. The company also accounted for 5.3% in operating profit margin, which is 2.9%p up from the previous quarter.

Operating profit increased due to improvement in sales performance in steel and trading 

These positive results can be attributed to increased performance in the steel and trading divisions, being operated by POSCO Daewoo and POSCO-China, even though the construction division showed a decrease in sales and profits. Overseas steel corporations exhibited remarkable improvement in sales performance, as Zhangjiagang Pohang Stainless Steel (ZPSS) and POSCO-Mexico realized profits, and the operating deficits of PT. KRAKATAU POSCO and POSCO SS-VINA are beginning to be reduced.

KRW 582.1 billion in operating profit, 10.1% in operating profit margin (in paraent basis) 

On a parent basis, POSCO recorded KRW 5.767 trillion in revenue, KRW 582.1 billion in operating profit and KRW 445.9 billion in net income during the term. Although revenue has slightly decreased, the company recorded KRW 210.9 billion in operating profit and KRW 184.1 billion in net income during the term, which is an increase from the previous quarter. This is driven by the sales increase of World Premium (WP) products, POSCO’s proprietary high-value products, along with the improvement of market conditions due to the price increase of carbon steel products and restructuring of Chinese steel companies.

POSCO recorded 3.682 million tons in sales volume of WP products, which amounts to an increase of 255,000 tons from the previous quarter. Among total product sales, the sales of WP products accounted for 44.5%, which is an increase of 4.8%p from the previous quarter.

Also POSCO recorded 10.1% in operating profit margin which is an increase of 3.9%p from the previous quarter.

POSCO forecasts to improve the financial structure of KRW 4 trillion within this year by accelerating the restructuring of subsidiary companies

POSCO realized continuous improvement of its financial structure. On a consolidated basis, it recorded 77% in debt-to-equity ratio, which is a decrease of 1.4%p from the previous quarter, while registering 19.2% on a parent basis, which is 0.1%p down from the previous quarter.

In particular, on a parent basis, the company recorded -356.3 billion in net debt in the first quarter from 341.3 billion in the  previous quarter as total cash and cash equivalents have increased more than debt. This is the result of improving the company’s overall financial structure that it has strived for over the last two years.

POSCO completed 6 subsidiary restructuring cases in the first quarter, which have been carried out since the announcement of the management reform plan in July of last year. The company sold Genesis, a subsidiary in the power generation sector, and finalized liquidation of POSCO-RUS, while completing the merger of POSCO Green Gas Technology. It is expected that the improvement effect will reach to approximately KRW 4 trillion through the restructuring of subsidiary companies.

Meanwhile, POSCO announced its sales goal of KRW 58.7 trillion on a consolidated basis, and 37.2 million tons for the production of crude steel and 35.3 million tons for product sales. The company also estimated that its investment costs amounted to KRW 2.8 trillion, which is KRW 300 billion up from last year, and net debt was KRW 14.6 trillion, which is KRW 1.9 trillion down from last year.

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KPSE.SI offers jobs to the youth in three villages—Samangraya, Kubangsari and Tegalratu—in Cilegon, where the Krakatau POSCO steel mill is located. These areas in particular boast a high unemployment rate, so the creation of jobs is essential for these residents’ financial independence.

Once selected, trainees of the program perform environment management tasks such as recycling resources and managing the drainage channel at the steel mill for six months. They also participate in competency enhancement training programs such as computer training in their spare time and on weekends. Upon reaching a certain level of competency, they are usually transferred to a more stable and professional job.

Over half of the first batch of trainees were hired at the affiliate companies of Krakatau POSCO. The second batch of 26 trainees is currently receiving training provided by KPSE.SI in hopes of procuring the next available jobs.

A representative of the POSCO 1% Sharing Foundation noted, “The KPSE.SI case is considered a successful business model in that POSCO’s global corporate social responsibility business is creating jobs in local communities while improving the quality of environment management at the same time.”

The POSCO 1% Sharing Foundation is a non-profit organization that is financed by the donations of POSCO employees who contribute 1 percent of their monthly salary. The organization aims to improve the social welfare of socially neglected people, the independence of local communities in Korea and around the world and the preservation of traditional culture.

Preemptive actions to client demands with steel industry know-how

With the know-hows gleaned from Korean steel industry, the foreign branches of POSCO had successfully stabilized the production process in their beginning stage abroad. Ever since their initial launch, they have been establishing their quality control system. As a result, they are now capable of providing preemptive responses to client demands, leading them to receive positive assessment.

POSCO-Mexico focuses on quality stabilization activities

Established to secure automobile companies in North America where automotive steel demand is increasing in a rapid pace, POSCO-Mexico has been concentrating on quality stabilization ever since its launch in November 2013. As POSCO-Mexico was successful in equalizing the quality of their products, they were able to further improve the efficiency in machining operations. Also, they were able to earn a positive reputation from North American automobile companies by actively providing the products and technology information that client are in need of.

POSCO Guangzhou branch enhances operation stability and production costs

Ever since their initial operation, POSCO Guangzhou branch has been putting their full effort on enhancing their automotive steel sheet quality, packaging layers and more. This endeavor brought improvements in operation stability and production costs. As POSCO Guangzhou branch continues to reinforce technology through dynamic collaboration with TSC staffs in China, they will contribute to further augmentation of POSCO’s global power.

US-UPI, successful management innovation through various improvement activities

UPI in the United States is an excellent example of successful innovative management achieved by all employees working together as a unity. With harmony between labor and management, the employees of UPI conducted a variety of improvement activities such as receiving external consulting for an effective restructure process. As they work on reinforcing their production efficiency, sales of high-quality steel and major reorganization, the current management structure of UPI is in the normalization process and such lucrative experience instilled a sense of pride to the UPI employees.

Krakatau POSCO‘s effort on management stabilization, POSCO-Maharashtra’s activities on production stabilization

In addition, due to the initial nature of the device industry, it is inevitable for Krakatau POSCO, POSCO-Maharashtra and some other branches to face deficits but it is expected that their management will be stabilized in short time. Actually, Krakatau POSCO has stabilized their production system as they reached the normal activity point in last May and they are now planning on expanding their sales structure until this upcoming December. POSCO-Maharashtra will also continue to engage in aggressive approaches toward their goal by the fourth quarter of this year.

Distinctive strategy with active client care activities

The foreign branches’ active client care is a distinctive strength of POSCO. POSCO has been establishing foreign branches and practicing consistent marketing strategies in the areas with steel industry growth potentials such as China, Southeast Asia and more. Not only stably providing products of excellent qualities, but also they have been emphasizing their differences by maintaining a total service system, including technology and logistics that clients ask for.

POSCO-CCPC’s sales manager, Tae-min Huh said, “As a sales manager, it feels most rewarding when I successfully make a new business relationships after constantly meeting local clients such as DFSK and convincing them to sign a new contract with us. Especially, when I hear from our client companies that our material supply and quality stability have improved further, I feel very satisfied. As our marketing strategy strictly focuses on the perspectives of the clients and listen to their stories with attention, we were able to create good relationships with the Chinese clients”.

Excellent global human resource is the driving force of POSCO

POSCO’s outstanding global human resource is another driving force of foreign branches that bring positive outcomes. In terms of overseas investment, POSCO commands a strict localization strategy.

POSCO provides professional training that includes leadership and organizational management to global employees those who are selected from each branch every year. Employees dispatched to the branches from the head quarter put extra efforts to learn the local culture and working method for effective processing. Also, as the foreign branches process their business under POSCO’s global standards, the foreign branches in various parts of the world maintains a global reputation for their work methods.

Tabata Yuki, who has been working as a sales director in POSCO-JEPC for five years, said, “At the beginning, I felt unfamiliar with the Korean working style and organization culture. However, by utilizing my given authority and abilities that I learned from the company, I believe that I was able to make an outcome in new client development despite of my relatively short career history”. Also, he added “In my opinion, POSCO’s differentiating factor with competing companies’ sales manager comes from actively sharing their global mindsets and knowledge through constant communication”.

Anish Aora, working in India POSCO-IDPC for seven years now said, “When I first joined the company, I faced a number of troubles processing the work due to the cultural differences between Korea and India. However, now I understand Korea and POSCO through constant communication with employees, career education and several visits to Korea”. Also, he added that POSCO’s good performances among the foreign factors are contributed by aggressive business mind toward their goal and standardized work process that applies equally in every foreign branch around the world.

Enhance relationship with the local community with Institution·Facility Support

Outstanding business performances by POSCO’s overseas subsidiaries stem from the formation of fond relationship with the local community. With their thriving business, POSCO’s overseas subsidiaries not only create new job opportunities, but also contribute to growth of local economy. Besides the economic boosts, POSCO has been actively supporting and constructing institutions and facilities in need to develop close relationship with the local community.

For example, China Qingdao Stainless Steel Co., Ltd., has been making generous contributions in the local community by supporting poor local families, nursing centers, scholarships and donations. In July 2014, the local news station extensively covered the company’s contributions. Similarly, POSCO was awarded grand prize in Korean Corporation CSR Award for its Ba Ria-Vung Tau Province Development Project.

POSCO’s overseas subsidiaries have resolved common difficulties in production, quality, and sales that often occur in the initial phase of the production and are currently being stabilized. These subsidiaries aim to promote win-win strategy for all parties involved and develop the local community.

POSCO was recently named by WSD as the world’s most competitive steelmaker for the seventh time in a row during the past five years. Apart from receiving credit for technological innovation and human resource management, POSCO has also been making continuous socio-economic and environmental efforts side by side with its stakeholders to create value and bolster mutual growth. The recently published 11^th annual sustainability report sums up these efforts. Let’s have a closer look.

About the 2013 Sustainability Report

[Download the 2013 Sustainability Report HERE]

First, the Report includes both financial and non-financial data.

POSCO and listed subsidiaries within the POSCO Family*, or those having more than KRW 1 trillion in sales are included in the consolidated ESG(environment, society, governing structure) data, which was verified by Samil PricewaterhouseCoopers.

Second, we report ‘Key Issues’ which have high ranks in the materiality test.

The report also includes specific information on the issues selected from the materiality test in order to include detailed information that the stakeholders want to know.

Third, we gathered the opinions of internal and external stakeholders and reflected them in the materiality test before publishing this Report.

Previously, there were some difficulties in reflecting stakeholders’ opinions because they were gathered in the course of preparing the Report. For this Report, however, we listened to stakeholders’ opinions from the planning stage and linked them to the materiality analysis process.

Fourth, we reported the cases of CSV (Creating Shared Value), ‘a management principle that seeks opportunity for business in solving social problems’.

We marked CSV cases separately within the contents describing POSCO’s management activities, including building a Saemaul Village in Ethiopia, training agricultural leaders in Mongolia, the Benefit Sharing Program, and Techno Partnership.

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Note: 2013 Sustainability Report further references

Reporting approach
The 2013 Report is based on the GRI (Global Reporting Initiatives) G4 guideline, ISO 26000, UN Global Compact, and POSCO’s unique report publishing process. The financial information reporting standards and definitions are based on the K-IFRS (Korean International Financial Reporting Standards.

Period of reporting
POSCO publishes the report annually. This Report contains information from January 1st, 2013 to December 31st, 2013. In some instances information up to April 2014 were included. The corporate governance section is based on the decisions made by the Board of Directors at the meeting held on March 14, 2014.

Scope of reporting
The Report contains the sustainability activities and performances of Pohang Steelworks, Gwangyang Steelworks, Pohang headquarters and the Seoul office. The ESG (Environment, society, governing structure) data covers POSCO and nine POSCO subsidiaries that are listed in the stock exchange or have more than KRW 1 trillion in sales. Information on shareholders, investors, and new green growth businesses cover the whole POSCO subsidiary.

Independent assurance
Assurance on this Report was conducted by Samil PwC, an independent assurance institution, in order to assure stakeholders on the credibility of the major data and publishing process of the Report. Assurance was conducted in accordance with ISAE3000 and AA1000AS Type II.

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POSCO 2013 Highlights

Why don’t we take a look at what efforts POSCO made during the year 2013, and their results?

[Click titles for details]

1. POSCO WINS THE ‘WORLD’S MOST COMPETITIVE STEELMAKER’ AWARD FOR 4 CONSECUTIVE YEARS!

On February 1, POSCO was named “The World’s Most Competitive Steelmaker” for the fourth time in a row. This was the result of the evaluation conducted by WSD (World Steel Dynamics) on 34 of the world’s steelmakers in 23 categories including production capacity, profitability, and technology innovation. POSCO had held the top position from 2002 through 2004, then was surpassed by Russian and Indian steelmakers, but regained top spot again in 2010 after 6 years, and has hence remained no.1 for 4 consecutive years.

2. POSCO RENOVATES WORLD’S BIGGEST FURNACE AT GWANGYANG STEELWORKS!

On June 7, after 108 days of repair works, POSCO held the blow-in ceremony for Gwangyang Steelworks’ No.1 blast furnace that was renovated as the world’s largest blast furnace. After its third enhancement made in 2013, Furnace 1’s volume now reaches 6,000 bigger than the previously world’s largest furnace (5,800) built by Shagang Group in China. The Gwangyang blast furnace applies a new cooling system, a production technology involving oxygen enrichment, and reduces fuel consumption by using high-temperature reducing gas efficiently, achieving a cost effective and environmentally friendly process.

3. DAEWOO INTERNATIONAL STARTS PRODUCTION AT MYANMAR GAS FIELD

On June 22, Daewoo International successfully began production at the Mya gas field, located in the northeastern sea of Myanmar. The Myanmar gas field project came in full swing when Daewoo International signed a PSC with the Myanmar Government. The gas produced was passed through the subsea pipeline, subsea production facility, and the production platform to check the gas production and treatment facility, and began selling to CNPC, a Chinese state-owned petroleum company from the gas selling location in Kyauk Phyu, west of Myanmar, since July 2013!

4. DECLARATION OF THE NEW ETHICAL MANAGEMENT PRINCIPLES

Celebrating the 10th anniversary of the proclamation of POSCO’s Code of Conducts, POSCO held a declaration ceremony for the New Ethical Management principle. The new principle, dubbed “Happiness Management” presents the vision “Let’s Come Together to Build a Better World!” and its 3 core values – future, common good, and win-win.

5. POSCO INCLUDED IN THE SUSTAINABILITY INDEX FOR NINE CONSECUTIVE YEARS!

For the first time in the steel industry, POSCO was included in the Sustainability Index by SAM-Dow Jones as a leading company for 9 consecutive years! In the 2013 evaluation, 31 steelmakers were evaluated, and POSCO received 77 points – 3 points higher than the previous year – and was selected as an outstanding company for the 9th consecutive year.

6. FIRST EXPORT OF FINEX TECHNOLOGY

On September 22, POSCO signed an MOA with state-owned Chongqing Iron and Steel Company, to construct a FINEX integrated steel plant. POSCO and Chongqing will each invest 50% in the joint project to build the FINEX integrated steel plant with an annual capacity of 3 million tons.

7. 1% FOUNDATION INAUGURATED!

POSCO’s 1% Foundation was officially inaugurated on November 18. The 1% Foundation was first started in October 2011, where executives and management-level personnel donated 1% of their salaries. POSCO and 26 POSCO Family companies participate in the campaign. The Foundation will implement sharing campaigns using the KRW 4 billion’s worth fund raised through donations during 2013 and the company’s matching grant.

8. INTEGRATED STEEL PLANT IN INDONESIA BEGINS OPERATION

On December 23, POSCO held the blowing-in ceremony for the 3 million tons/year blast furnace in Cilegon, Indonesia. Krakatau POSCO is expected to produce 1.8 million tons of slab and 1.2 million tons of thick plates annually. Krakatau POSCO will secure the domestic sales network which can fetch higher prices than exporting the products, and plans to sell 1.5 million tons of slab and 600 thousand tons of thick plates in the Indonesian market during 2014.

POSCO’s vision is to become a company “loved by the people and admired by the world.” As CEO Ohjoon Kwon promised in his foreword to this report, POSCO will fulfill its duties and obligations as a corporate citizen. As a company built upon the very wishes and aspirations of the nation, POSCO will remember that it is forever in debt to the people and act accordingly. From the endeavors in preserving biodiversity to sharing with those in need through the 1% foundation, POSCO’s corporate philosophy will always be about the betterment of humanity.Thank you.

Indonesia has a rich amount of tropical resources focusing on agricultural development. While the nation has had expanded trade surplus and has a rich amount of natural resources, Indonesia still has poor education systems where only one third of instructors have completed a college education. POSCO and its employees have made efforts to improve the education system in hopes to help build the future for Indonesian children.

Dreaming of joyous schools in Indonesia! About POSCO’s education improvement project

Krakatau POSCO has been funding education improvement projects led by ChildFund Korea. In partnership with ChildFund Indonesia,  POSCO has helped set up schools in villages near steelmills called Samangraya, Kubangsari and Tegalratu.

Pictured here: POSCO employees planting flowers with students in Indonesia

Overall, there were four programs included under the slogan “Sekolah Asik” which means “joyous schools”. The programs included: 1) Training program for educators, 2) Voluntary programs for students, 3) Education infrastructure improving program, and 4) Volunteer opportunities for employees of Krakatau POSCO.

[box] What is Krakatau POSCO? Krakatau POSCO was jointly established by POSCO and Indonesia’s state-run Krakatau Steel at a share ratio of 7 to 3, and boasts iron making, steelmaking, and steel plate production facilities. The company is capable of producing 1.8 million tons of slab and 1.2 million tons of steel plate annually. It is especially noteworthy as it is the first integrated steel mill that was established by POSCO in Southeast Asia. It was a new milestone in overseas steelworks construction as it involved various POSCO businesses in different fields including construction, power generation, and IT. POSCO is planning to operate steelworks in Indonesia to create a steel belt that connects China, Vietnam, Indonesia and India in order to target the entire Southeastern Asia region.[/box]

More about the education improvement programs in Indonesia!

Since last September, education environment improving activities have started in Krakatau POSCO that specifically target schools near the steel mill. Krakatau POSCO has participating in volunteer projects in efforts to support poor education conditions in Indonesia. Let’s explore the different types of work that POSCO employees have been involved in so far.

Improving qualification of instructors and increasing student participation!

Currently, less than one third of instructors have completed college education in Indonesia. Thus, improvement of the qualification of instructors is a major issue. To address this, Krakatau POSCO has created a training program for educators in order to improve their teaching capabilities. This program is in line to be expanded for total 6 schools and 120 students in 2014 by request of schools nearby.

Pictured here: A student in Indonesia holds up a picture that portrays the type of school she dreams of

Pictured here: Krakatau POSCO’s director, Kyung Joon Min, participates on one of the volunteer days in Indonesia

Pictured here: POSCO volunteers and children participating in an athletic competition

In addition, volunteer programs for students were created in order to give students a chance to trade positions and actually take part in education improvement projects. To raise awareness among students, students were asked to provide suggestions for areas to improve. Through discussion, students got involved in deciding and ultimately participating in volunteer work.

Improvements to education infrastructure and volunteering

Conditions at schools near Cilegon which is where the steel mill is located are very poor. In fact some schools do not have any desks so students participate in classes from the floor. There are no washroom facilities at school so students must go to nearby homes. Schools that are funded by the government are relatively better, but privately funded schools are in dire conditions.

Pictured here: Krakatau POSCO employee teaching children how to wash their hands

Krakatau POSCO is addressing these harsh school infrastructure conditions by providing desks, school materials and even building bathrooms, libraries and other education infrastructure. Going forward, employees at Krakatau POSCO plan to participate in volunteer programs at these schools.

Pictured here: Making improvements to the education infrastructure in Indonesia

Surprising changes made through improving the education environment

Three schools in the area of Cilegon are now witnessing many positive changes due to education improvement projects led by Krakatau POSCO. As instructors have learned various teaching methods and new skills, the 1,071 students at the three schools are now much happier and participate more in class as well!

Here is a short video highlighting the positive influence that Krakatau POSCO has had on the education system in Indonesia.

Below are feedback from those impacted by the education improvement projects in Indonesia.

Pictured here: POSCO employees with students

Webi Andriansah (Employee in the Environment & Energy department at Krakatau POSCO): Students made me feel like I was a big brother to them. Also they asked many questions about my job, experiences of school, family etc. I felt many emotions when I shook hands with student after the class. This activity was not only a new experience to students but it also affected my life values and mind!

Ana Siva Urrohmah (6th grade student): I’m a student of SDN Samangraya Ⅱ. I’m so happy and thankful for the classroom that my friends and I can use. I’m curious about how the new classrooms will incorporate our opinions and I am sure it will make our educational experience more joyful. In addition, now that we have sports equipment, we can now participate in events that we previously could not join in.

Waldatun TH (Teacher at SDN Tegal Kidondong ): The training program I participated in was a great opportunity to share opinions and ask questions freely. The program supporters answered questions so actively even during lunchtime or afternoon breaks. I got confidence by being able to actually apply methods that I learned through this program in the classroom!

We hope you enjoyed our blog post about the efforts that Krakatau POSCO is making in Indonesia to improve the education experience for students! POSCO is building a better, brighter future for the younger generation!