Plans to conduct a feasibility study by the first half of 2026 for a 15-year BOT project

On the 15th, POSCO INTERNATIONAL signed a memorandum of understanding (MOU) with the city of Ulaanbaatar, the capital of Mongolia, at Ulaanbaatar City Hall to promote a heating supply project utilizing sewage heat.

The signing ceremony was attended by key figures from both sides, including Chung Kyung-Jin, Head of Corporate Strategy and Finance Group at POSCO INTERNATIONAL, and T. Davaadalai, First Deputy Governor of Ulaanbaatar.

Under this MOU, POSCO INTERNATIONAL will drive the plan to supply waste heat from the central sewage treatment plant in Ulaanbaatar to nearby redeveloped residential areas.

Following a joint feasibility study to be completed by the first half of 2026, the project is expected to move into full-scale implementation in the second half of the year under a 15-year Build-Operate-Transfer (BOT) model, provided its economic and technical viability is confirmed. Upon completion, the project will provide district heating to a newly constructed residential complex of approximately 4,000 households.

Ulaanbaatar is known for having some of the world’s worst air pollution during winter, largely due to coal-based heating. POSCO INTERNATIONAL came up with a solution to address this issue by recycling waste heat from the sewage treatment process for district heating, thereby reducing both greenhouse gas emissions and fine dust.

The company has already showcased its expertise in the field through its district heating project utilizing sewage heat at the Tancheon Water Treatment Center in Seoul. Through this project, the company supplies 204,900 Gcal of heat annually to 20,000 households in Gangnam-gu, saving the equivalent of about 20,490 tons of oil and cutting 33,972 tons of carbon dioxide emissions.

“This MOU is significant as it not only helps address the environmental issues in Ulaanbaatar but also highlights POSCO Group’s environmentally friendly energy technologies and global business capabilities,” A POSCO INTERNATIONAL official said. “We plan to explore opportunities to expand this business model beyond Mongolia to other Central Asian regions.”

T. Davaadalai, First Deputy Governor of Ulaanbaatar, remarked, “We expect POSCO INTERNATIONAL’s proven sewage heat technology to offer practical solutions to the air pollution issues in the city. Through this collaboration, we will be able to create a new model that enhances citizens’ quality of life and supports sustainable urban development.”

▲ POSCO INTERNATIONAL signed an MOU with the city of Ulaanbaatar, Mongolia. From left: Chung Kyung-Jin, Head of Corporate Strategy and Finance Group at POSCO INTERNATIONAL, and T. Davaadalai, First Deputy Governor of Ulaanbaatar.

POSCO’s Representative Organizations, Including the POSCO Labor Union and Labor-Management Council, Participate in Overseas Donation Efforts and Have Been Washing, Packaging, and Transporting Old Uniforms Since March

Delivered to Low-Income Livestock Farmers in Mongolia in Collaboration with International NGO Global Sharing Movement

POSCO’s labor and management have achieved their first significant milestone in meaningfully repurposing old uniforms, which they have used together for the past 30 years. On June 3, POSCO’s labor and management held a ceremony at the Jargalant Community Development and Education Center in Ulaanbaatar, Mongolia, to donate old uniforms to low-income livestock farmers.

This donation was made in collaboration with the Global Sharing Movement (NGO), which conducts educational projects for low-income livestock farmers in Mongolia. The event was attended by representatives from POSCO’s labor organizations, including the POSCO Labor Union, the Labor-Management Council, the Labor Cooperation Office, and the Global Sharing Movement.

In February, POSCO introduced new uniforms that prioritize safety in line with global standards. The company announced plans to explore new uses for the existing sky-blue uniforms, including supporting vulnerable overseas communities. Of the old uniforms, 10,000 pieces will be used by workers in low-income livestock farming communities in Mongolia, 20,000 pieces were donated to a vocational training sewing center in Madagascar, and 60,000 pieces will be sent to job-creation sewing centers in the Philippines, Nepal, and Ethiopia to help low-income women become self-reliant. These uniforms will undergo reprocessing and commercialization.

Bon-seok Lee, the employee representative of POSCO’s Labor-Management Council, said, “We are honored to donate POSCO’s uniforms overseas and will continue to actively participate in meaningful activities in the future.” Seong-han Lee, the planning director of the POSCO Labor Union, said, “We will fulfill the social responsibilities of the union and lead the way in establishing an exemplary K-labor-management culture. We also plan to actively participate in volunteer and sharing activities in the future.” Since March, POSCO’s labor union and labor-management council have worked together on washing, packaging, and transporting the uniforms for donation.

Meanwhile, this donation effort is particularly meaningful in that it involved POSCO Group’s collective capabilities. POSCO Humans, the first domestic subsidiary-type standard workplace for the disabled, collected and washed the uniforms, while POSCO Flow used domestic and international logistics networks to transport them overseas.

▲POSCO’s labor and management representatives take a commemorative photo with livestock farming community members in Jargalant, Mongolia, after delivering the old uniforms.

POSCO Energy formed a consortium with Japanese general trading company Marubeni, each contributing 50 percent, to take part in the project, which is worth $800 million. POSCO Energy will jointly operate and maintain the power plants with Marubeni over the next three decades.

POSCO Energy plans to begin the construction of the power plants of Morupule B Phase II during the second half of 2016, and will start operation in May 2020. Special environment-friendly Circulating Fluidized Bed (CFB) combustion will be installed in the power plants to lower the emissions of pollutants such as nitrogen oxides and sulfur oxides. The plants will receive coal from nearby Morupule Coal Mine for smooth supply and delivery of raw materials.

GS Engineering & Construction Corp. will be in charge of Engineering Procurement Construction (EPC). Six hundred million dollars, about 80 percent of the total investment, will be financed by Export-Import Bank of Korea, Japan Bank for International Cooperation (JBIC) and an international commerce bank for project financing.

Botswana is the world’s second largest diamond producer and has a transparent administrative process and a stable political system. It is also showing rapid economic development, due to abundant natural resources. Botswana plans to build 1200-megawatt power plants locally by 2019 to deter dependence on imported power from South Africa, leading to high expectations for new business in the future.

“Being selected as a preferred bidder for this project is meaningful in that we have successfully entered the privately managed power plant business through international bidding in Botswana. Following this, we will establish a foothold to make forays into the power plant market in southern Africa and to make POSCO Energy a leading global energy company,” said Yoon Dong-jun, CEO of POSCO Energy.

POSCO Energy recently completed the construction of combined-cycle LNG power plants No. 7, 8 and 9 in Incheon, solidifying its position as the largest private energy producer in Korea. It is currently working on the construction of 2100-megawatt environment-friendly, coal-fired thermal power plants in Samcheok. POSCO Energy plans to grow as a globally integrated energy company through diversifying energy businesses in Korea and overseas, such as completing construction of the Mong Duong II Coal-Fired Thermal Plant in Vietnam and the CHP5 Coal-Fired Cogeneration Power Plant in Mongolia.

 
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1. CEO Ohjoon Kwon 

POSCO’s 8th CEO Ohjoon Kwon was officially inaugurated in March. CEO Kwon has shown a strong will to actualize POSCO’s vision, ‘POSCO the Great’ by enhancing steel competitiveness based on distinctive technological skills, wise decisions and concentration.

In pursuit of the group’s vision, CEO Kwon has been actively engaging in various activities. Visiting numerous global sites, he encouraged and applauded the accomplishments of all employees. Furthermore, as a member of the World Steel Association’s board of directors and an official member of the execution committee, CEO Kwon exchanged perspectives on the steel industry with leaders of fellow global steel companies. Through diverse opportunities of meetings, he has shown engaged and flexible communication with employees as well. Moreover, CEO Kwon visited client companies such as Hyundai Heavy Industries to inspect current status of solution marketing and announced POSCO’s new business strategy at an investor relations meeting for stakeholders and investors. Ever since his inauguration, CEO Kwon has been passionately leading toward ‘POSCO the Great’ by directly managing major topics of clients and investors.

More details are available here at Inauguration of Ohjoon Kwon and Vision for ‘POSCO the Great’ and POSCO the Great! CEO Ohjoon Kwon Speaks about POSCO’s Vision & Direction

2. Creative Economy
POSCO’s mutual growth activities for 2014 Creative Economy evolved in many different forms. Fostering venture business through ‘Idea Market Place’, POSCO took the lead of the creative economy in Korea. Especially, POSCO Partner’s Day event provided a platform for companies to share cases of mutual developments. Also at the event, POSCO announced the mutual growth vision, ‘Win-win for the Great’, inspired by ‘POSCO the Great’, to promote both POSCO group and SMBs to expand further in the future. As a result of POSCO’s contribution to creative economy, President Park Geun-hye visited No.3 FINEX plant and Pohang Creative Economy Innovation Center to encourage the notable performance. Officially opening in 2015, the Creative Economy Innovation Center is expected to promote POSCO’s creative economy activities and add more to revitalization movement for creative economy.

3. Solution Marketing

The key point of solution marketing lies in clients. By combining technology and marketing, POSCO has strengthened its competency by offering new and distinctive values to POSCO’s clients. With Steel Solution Center’s operation, POSCO provided preemptive actions to the clients and focused on the sales of strategic products such as marine and energy steel material. Moreover, the launch of Technical Service Centers has created opportunities to provide various solutions to clients more closely. Furthermore, other examples of successful solution marketing include POSMAC, an ultra-corrosion resistant alloyed steel plate, high-manganese steel LNG storage tank and a concept car ‘EOLAB’ which received spotlight at 2014 Paris Motor Show. As a result to many efforts, POSCO’s Global EVI Forum in October, was lauded as POSCO’s distinctive client-oriented marketing festival. POSCO’s solution marketing to enhance client value will continue in 2015 as well.

More details are available here at 2014 POSCO Global EVI Forum.

4. POSTIM
POSCO’s POSTIM is an innovative model developed and applied to achieve the corporate vision of `POSCO the Great’. POSTIM, which stands for POSCO Total Innovation Methodology, is designed to improve the previous innovation system by integrating employees, affiliates, tasks and innovation. POSTIM consists of PWS, QSS+, and SWP activities. Each activity act as an engine for implementation to practice the management ideologies. In fact, on the 4th of December, the Innovation POSCO Festival 2014 took place for the purpose of looking back on the efforts and traces of innovation throughout the year.

More details are available here at POSTIM.

5. Financial Structure Reformation
The financial structure reformation is one of the innovation agendas suggested by CEO Kwon. In April, POSCO successfully won project financing for Australia’s Roy Hill Mine project. By this means, POSCO, holding 12.5% of the mine’s stake, will be provided with at least 11 million tons of high-quality iron ore every year for the following 27 years. Moreover, POSCO promoted to sell its LNG Terminal, Posfine and POSCO-Uruguay while signing a MOU with SeAH Group and sold specialty steel affiliate to SeAH Besteel. In addition, POSCO has secured financial liquidity by selling Vietnam’s Diamond Plaza (POSCO E&C) and Masan city’s Daewoo Department Store (Daewoo International). As shown, this year was a significant time period for POSCO, considering that POSCO pursues to secure its steel business competency by achieving financial solvency.

6. Working Process

Experiencing a series of innovation throughout the year, POSCO has stepped forward in working method as well.

[Applying ‘Project-based Working Process’]
The ‘Project-based Working Process’ identifies projects that will help to improve profitability and accomplish qualitative goals. Also, this work method puts heavy emphasis on creating outcomes.

[Specialist and PCP-oriented Project in Progress]
Specialists and PCPs are promoting projects by drawing issues from their vast array of knowledge and experiences.

[IP Project Counsel]
Last July, the IP Project Counsels were held simultaneously in Seoul, Pohang and Gwangyang to share the results for the first half and plans until the yearend. At the event, CEO Kwon monitored projects in process and provided his ideas to project managers.

[IP Project Special Reward System]
POSCO established the ‘IP project special reward system’ for employees to be encouraged to challenge themselves to take on new projects and concentrate on excellent performance. This system gives substantial rewards to teams or individuals with outstanding results.

More details are available here at Project-based Working Process and IP Project.

7. POSCO the Great!

POSCO has been named the world’s most competitive steelmaker for the 7th consecutive time during the past five years by World Steel Dynamics (WSD). Moreover, POSCO was selected as a global sustainable leading company in the SAM-Dow Jones Sustainability Indices (SAM-DJSI) and was named as the ‘Most Respected Companies in Korea’ by the Korean Management Association Consultants (KMAC). Also, in July, POSCO was named as the 177th world’s largest corporations by the Fortune’s global 500.We hope POSCO will continue to create further accomplishments in 2015!

More details are available here at World’s Most Competitive Steelmaker and Most Respected Companies in Korea.

8. Future Competency

In 2014, POSCO focused on preparations to attain future competency. Three FINEX plants have started operation since January and POSCO-Thailand’s CGL has started its construction in August. Also, POSCO has been building a large demo plant in South America as a prelude to the entry in the global market for world’s first lithium extraction technology, developed by POSCO. In November, Gwangyang Steelworks’ hot rolling plant No.4 was completed. Now indeed, high-quality steel production is capable purely with POSCO Family’s technical ability. This production system supplies 3.3 million tons per year. Lastly, POSCO-Krakatau which has initiated its iron-making in January, also appears to be making pleasant results. 2014 was surely a year of productive and diverse constructions. We expect for more remarkable activities in 2015!

More details are available here at POSCO’s Global Competency.

9. Safety
This year, safety has been a very important keyword to everyone in Korea. Through safety exercises like POSCO center fire drills, Pohang and Gwangyang group fire trainings, POSCO Family Safety and Disaster Prevention Resolution Conference, POSCO has been engaging in preemptive activities in safety to stress the importance. Also, POSCO has enhanced inspection in Seoul, Pohang and Gwangyang for sites that are prone to fatal accidents while conducting customized emergency response trainings to reduce risk factors beforehand. In addition, POSCO has created curriculum for safety professionals and conducted cross audits for each steelworks.

10. Pride
Establishing the world-class training process for technical professionals, POSCO has been striving to maintain as a company where employees hold pride in their hearts. In fact, through ‘Great Work Place’ activities, POSCO has been providing a working environment of flexible commuting time and improved work engagement. Also, POSCO has prepared a 5-level job competency level system to foster technical workforce while also selecting employees with professional knowledge and colleagues’ respects as ‘POSCO Master Craftsmen’ and providing exceptional rewards to them. Lastly, through ‘IP Concert’, which was held 19 times in Pohang, Gwangyang and Seoul, employees and executives shared new business philosophy and reinforced the pride in POSCO.

More details are available here at ‘The Great Company to Work At’.

11. POSCO Family News

[Daewoo International]
The hottest issue of 2014 Daewoo International would be about Myanmar Gas field. Starting in June 2013, the field has been enlarging supply ever since its first production which was approximately 500 million cubic feet. It now has become the main source of profits at Daewoo International.

[POSCO ICT]
In the smart energy sector, 2014 was a fruitful year for POSCO ICT. For instance, energy storage system ESS and energy efficiency system for factories and buildings have achieved outstanding outcomes. Including Building Energy Management System (BEMS), which is currently applied at POSCO ICT Pangyo office and Portable Emissions Measurement System (PEMS) at Gwangyang Steelworks’ oxygen plants, POSCO ICT’s various energy-related business will continue to advance in 2015.

[POSCO Energy]
‘Beyond Energy, Better Life’! Acquired by POSCO Energy, TONGYANG Power has marked its new start with the new name of POS Power. Thus, it is gaining many people’s expectations as they expand abroad into private development business. Furthermore, POSCO Energy has secured a license for 450MW power coal cogeneration plant which is the biggest in size in Mongolia. As a result, POSCO is now the largest shareholder of the fifth power plant business in Mongolia.

[POSCO E&C]
The Northeast Asia Trade Tower is a landmark in Songdo City and the tallest building existing in Korea. 305m in height and 68 floors in total, the building was under construction for approximately eight years. Besides its office and accommodation, the building features many additional facilities. In fact, Daewoo International will soon be joining the office space. Please look forward for POSCO E&C’s activities to become one of the top 10 global construction companies in 2020!

More details are available here at Northeast Asia Trade Tower.

Today, we took a look back on the keywords of 2014 in POSCO. Among the keywords above, we wonder which word stays in your memory the most. As a closure to 2014, we would like to thank you and all employees who trusted POSCO group for the sincere support!

Home to a promising market and a booming economy, Asia is definitely the world’s hottest region nowadays. It’s also becoming more and more commonplace for people around the globe to consider Asia as their next vacation destination. From the Taj Mahal to the Great Wall, Asia is full of wonderful and mysterious places to visit. Let’s have a quick look at some of the wonderful UNESCO World Heritage Sites in Asia! 

#1 Taj Mahal (India)

(Photo courtesy of wikimedia, http://bit.ly/1w3S8dU)

Regarded as one of the eight wonders of the world, Taj Mahal is considered by many historians to be the most beautiful architectural masterpiece in history. Taj Mahal was built by Muslim Emperor Shah Jahan in the memory of his dear wife and Queen Mumtaz Mahal at Agra, India. Listed as a World Heritage in 1983, the stunning palace is known to present its finest at dawn and sunset.

#2 Great Wall (China)

(Photo courtesy of Wikipedia, http://bit.ly/1sA7rLm)

The Great Wall of China is a truly mammoth structure. The entire length of the wall is said to be 21,196km long, almost half the circumference of planet Earth! If you’re like most travelers and can’t walk that much, then stop by the most famous part of the Great Wall at Jinshanling, built by the first Emperor of China Qin Shi Huang.

#3 Angkor (Cambodia)

(Photo’s courtesy of pixaboy, http://bit.ly/1n9Hxst)

The stunningly mysterious ancient complex used to be the capital of the Khmer empire, which dominated mainland South-East Asia for centuries. The name “Angkor” derives from Sanskrit, meaning “city”. Let yourself be awed following the architectural footsteps of the ancients.

How many of these famous UNESCO World Heritage Sites have you visited? There are still so many more sites to introduce, but today, Hello, POSCO has prepared one particular recommendation: Namhansanseong in Korea. Shall we take a virtual tour to the historic monument that has been newly listed as a World Heritage Site in 2014?

In the Bucket List: 2014 UNESCO World Heritage Site Namhansanseong

(Photo’s courtesy of Wikimedia, http://bit.ly/1mLJykv)

Namhansanseong has been newly listed as a UNESCO World Heritage Site in 2014, making it one of the hottest places to visit in Korea along with Gyeongbokgung(ancient royal palace), Bukchon Hanok Maeul(village of traditional houses), Namdaemun Market(bustling market in front of an ancient guard tower), and Insadong(traditional folk village). On May, beneficiaries of the POSCO Asia Fellowship Program, a scholarship program by POSCO TJ Park Foundation, visited Namhansanseong and were awed by its splendor.

[box] POSCO TJ Park Foundation & POSCO Asia Fellowship

POSCO demonstrates its commitment to being a socially responsible corporation through the POSCO TJ Park Foundation. The foundation promotes POSCO’s global citizenship through the management of various structured programs. Among the foundation’s programs are: POSCO Asia Fellowship, which goal is to promote understanding and mutual growth among Asian nations; POSCO TJ Park Prize, which is awarded to those who have made outstanding achievements in the fields of science, education and volunteer work; and TJ Park Science Fellowship, which supports the research of basic scientists in Korea.

The POSCO Asia Fellowship program is a scholarship program that supports prospective leaders of Asia by providing tuition and living expenses to young intellectuals from Asian countries as they enroll for Master’s or Doctoral courses at some of the prestigious Korean universities and institutions and learn more about various aspects of Korean society and culture. Whereas scholarships in Korea are generally designed to benefit Koreans who wish to study abroad, this project is unique in that it brings non-Korean Asian students to Korea to help them establish intimate relationships with the Korean society. The Foundation believes that this program will not only enhance the participants’ expertise in their individual fields of study, but also help them grow as global leaders and provide them with a deeper understanding of Korea by giving them opportunities to gain first-hand knowledge of the people and the culture. [/box]

Places to visit at Namhansanseong 

The POSCO Asia Fellowship scholars took Route #1, otherwise known as “the road of history and life” at Namhansanseong. The 3.8km-long route takes 80minutes to finish, so it’s the best course for beginners looking for a short and easy walk.

Sueojangdae: The Command Tower

Sueojangdae (Photo’s courtesy of Gyeonggi Province Blog, http://bit.ly/1jfzxeC) 

Sueojangdae, or the Command Tower, is located at the west of Namhansanseong. The two-story tower, built to command the army and investigate the enemy from afar, is the only remaining tower left in the fortress. The signboard on the 2^nd floor that reads Mumangru (“Never Forget”) was written by King Youngjo himself, as a reminder of the humiliating defeat of the Manchu War of 1636. During the War, then King Injo was forced to bow three times to the Manchu King, and his son Hyojong was sent away as prisoner for 8 years. The words “Never Forget” on the signboard embodies King Youngjo’s determination to seek revenge for the humiliating historic incident.

Seoammun: The Secret Passage beneath the Command Tower

Beneath the Command Tower, the students discovered the secret passage “Seoammun”. The passage was something they had never seen before, and the students became immersed in Korean culture by sneaking into the passage themselves

For more information on recommended routes and locations, check out the official Namhansanseong homepage here (Link)

Epilogue: POSCO Asia Fellowship Scholars share their impressions of Namhansanseong  

After their visit to Namhansanseong, the POSCO Asia Fellowship Scholars felt their love and understanding of Korean culture grow. Let’s take a look at the comments from some of the students after the tour!

“It was a great opportunity to enjoy a beautiful view and the awesome Namhansanseong. We don’t have anything like this in Kazakhstan. More than anything, I was smitten by the Korean full course meal we had after sightseeing. I’m deep in love with Korea now. Spasibo (Thank You), POSCO!” – Rafael Vecsentayev ( Graduate School of Sogang University, Kazakhstan)

“I think Mongolia and Korea are similar in many ways. The people look similar, and they both emphasize the importance of living in harmony with Mother Nature. These similarities make me feel more at home in Korea. I sincerely thank POSCO and the TJ Park Foundation for giving me such a wonderful opportunity. I’ll study harder!“ –Undra Erdenesot (Graduate School of Seoul National University, Mongolia)

“The Great Wall of China is much larger than Namhansanseong, but is less in harmony with the surrounding nature. Namhansanseong has a truly beautiful view” – Yuriwan (Seoul  National University, China)
 

If you haven’t put Namhansanseong in your travel bucket list for Korea yet, now’s the time to do it!  Have a wonderful and meaningful time learning about Korean history and culture at the UNESCO World Heritage Site Namhansanseong!

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.

[box]

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.

[/box]

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.

On the contrary…Mongolian residents nowadays say that there are too many difficulties in nomadic life so they actually want to settle down. However, many do not have any idea how to sustain such stationary life.

Pictured here: Picturesque scenery of Mongolia yurts (also called ger)

An inspirational story about a brave woman, Chewolma

Meet, Chewolma (age 38), she is one such individual who was torn between a nomadic lifestyle versus a stationary life in Mongolia. Responsible for two children and family by grazing cattle and yak, she fell into despair last 2010 as her entire flock died due to severe cold with temperatures dropping to negative 52 degrees.

Pictured here: Chewolma who no longer wanted to live a nomadic life

Even though she appreciated the beautiful nature her entire life, the hardships that nature brought had negative impacts on her livelihood. Chewolma therefore decide she wanted a stationary life for better education opportunities for her children and the health of the family.  However she did not know how to sustain her livelihood and raise animals without moving around.

Pictured here: Chewolma and her 2^nd son

Then one day, she heard about POSCO’s Community Development Training Center (CDTC). She enrolled in courses and was the 11^th student to complete the program. She was able to build upon her knowledge on breeding and grazing livestock by learning about settled farming, as well as, farm income and operating structure.

Pictured here: Chewolma in Korea for training

Until then, Chewolma never had the opportunity to meet and share information with people in the similar field. The whole experience was exciting just like a special school excursion. Once she completed the program, POSCO provided a small fund so that she could apply her new knowledge in real life. In 2012, Chewolma started a settled stockbreeding farm with two horses and cows. Even though it was a small start, she won an animal milking competition where her livestock produced 7 liters of milk more than the average 5 liters. You could see Chewolma’s dedication just by looking at her cows. 

Pictured here: one of the cows that Chewolma takes care of

Rumor has it, Chewolma takes such good care of her livestock that other nearby residents secretly bring their own livestock to her place at nighttime.  Haha!

Chewolma’s farm now is full of 20 cows, sheep and goats. She no longer is forced to lead a nomadic life since she is an expert on preparing animal feed. In addition to making an income, she has proactively promoted a cause, “green environment for our children’s future”. Her activeness has engaged other nearby farms and government officials to help support her cause.

Pictured here: Stationary farm and home that now belongs to Chewolma

Help to make a smooth transition

POSCO’s regional development education business in Mongolia has been helping women like Chewolma. POSCO’s Community Development Training Center (CDTC) opened in November 2010 with Korea International Cooperation Agency (KOICA), 65 km north of Mongolia’s capital, Ulaanbaatar.  It is being operated by Global Civic Sharing and has been providing 8-day educational courses to over 612 farmers.

Pictured here: POSCO’s Community Development Center in Mongolia

Going forward, POSCO CDTC in Mongolia will select 80 more students in 2014 to help more people like Chewolma sustain a settled livelihood.

In September of this year, POSCO CTL business plans to expand education and support opportunities for the citizens of Baganur.

Pictured here: Graduation photo of individuals who completed the program provided by POSCO

Those that pass through POSCO’s Community Development Center programs can take their learnings to each of their villages to begin profit-making projects and be leaders in their respective communities.

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What is POSCO’s CTL (Coal to Liquid) Business in Mongolia?

CTL stands for ‘Coal to Liquid’ and is a process that allows coal to be utilized as an alternative to oil. POSCO’s green energy plant business aims to provide clean energy to Mongolian society.

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Actively unfolding global Saemaul Movement, the new village movement, in poor areas of Africa and Asia, POSCO has been carrying out infrastructure construction projects, which are conducive to economic development ,including developing rural villages, improving housing environment and building agricultural training centers, where farming techniques are passed down and agricultural leaders are made, thereby helping them grow and become independent.

As part of this global Saemaul Movement, POSCO has been carrying out the ‘Mongolia Agricultural Leadership Training Program’ in Mongolia in partnership with Global Civic Sharing, an international development NGO.POSCO established a Local Development Training Center in Jargalant Mongolia in 2002, and has been conducting training every year for 120 of the agricultural leader candidates selected throughout Mongolia since 2010. The agricultural leadership training project is to provide skills to Mongolia which will substantially contribute to enhancing incomes for local rural villages. Such skills include the practice of greenhouse agricultural and the building of cattle sheds.

The project is also designed to promote communal spirit for the empowerment of leadership qualities and abilities. So far, POSCO has conducted 14 different agricultural leadership trainings along with5 lots of the leadership camp, and 667 trainees have completed the training course.

Among them, POSCO selects some 10 outstanding trainees each year and provides them with a study tour to S. Korea which includes a field trip to ‘Eco-Farm’, an eco-friendly agriculture support center operated by POSCO in the city of Pohang. 11 outstanding trainees have been selected this year.

They arrived in S. Korea on September 29, and were given with advanced agricultural techniques of the country. For four days from September 30, the Mongolian trainees received practical training necessary for improving agricultural techniques, including pasturage plants cultivation, potato cultivation, agricultural machinery and eco-friendly material manufacturing, as well as residential leadership training on how to convince residents, local issue solving techniques, economic development strategy, and more.

While paying a visit to the memorial hall in the birthplace of Saemaul Movement, Pohang steel mill and POSCO center, they also had a time to appreciate and experience S. Korea and POSCO, which have accomplished a great deal in developing the economy based on the Saemaul Movement. After visiting Pohang steel mill and the forestation memorial forest in Goryeong-gun on October 4, the trainees will move to Seoul where they have time to explore and experience the culture of S. Korea, before returning to their country on October 6. While spreading the Saemaul development model to African and Asian countries, POSCO has demonstrated a variety of accomplishments.

In Mozambique and Zimbabwe of Africa, POSCO built Saemaul agricultural training centers, teaching specialized knowledge and techniques about agriculture and stockbreeding, while increasing agricultural production and contributing to solve Africa’s famine problem. In Ethiopia, meanwhile, the Saemaul Development Project is under way, with overseas volunteers including the retirees of POSCO along with their family members stepping up their efforts to improve village environments as well as enhance the income of their neighborhoods. When it comes to Asia, POSCO is promoting Dream Village project to develop a village for non-homeowners in Vietnam, and carrying out the global Saemaul Movement in Indonesia, Nepal and Mongolia.

In 2010, POSCO and MCS Group started examining this project, and in 2012, Hatch, a Canadian CTL plant engineering company, suggested the project’s business feasibility. As a result, POSCO and MCS Group established Baganuur Energy Corporation as a joint venture to start up the business base for clean energy in Mongolia.

The clean energy project aims to produce 100,000 tons of DME and 450,000 tons of diesel oil per year once completed. The Mongolian government agreed on the importance of the project in terms of both securing stable energy resources and developing environment-friendly power generating facilities, so it is providing its full support for the project’s successful outcome.

The rapid increase of fossil fuels has dramatically damaged Mongolia’s environment for the past few years. According the World Bank, Ulan Bator’s air pollution index between 2008 and 2009 was 2.8 times higher than Guangzhou, China and 5.6 times worse than San Diego, the U.S. With the project, POSCO targets to save Mongolia’s environment, and secure its foothold in clean energy development for expanding the firm’s global energy business.

POSCO is also building a clean coal synthetic natural gas plant with 500,000 tons of annual production capacity in Gwangyang and it is expected to enter into full operation in 2014. A 75% of the total process of the plant is similar to the Mongolia’s CTL project. Based on its years of experiences for coal processing, energy development technologies and operation management, POSCO will continue staying a jump ahead for the global clean energy plant business.

From 2011, POSCO brought the famous economic movement back from the past and utilized its know-hows and spirits in order to tackle poverty shadowing certain areas in Africa and Asia. ‘Hello, POSCO’ gives you POSCO’s exciting journey as a missionary of New Community Movement.

POSCO’s customized global CSR activities for different countries

Every country has different industries it needs to develop upon. For instance, Mozambique needs specialized agriculture technologies while Zimbabwe requires tailored education for the next generation farmers. New villages should be constructed for Ethiopia and New Community Movement is being adopted by the communities in Vietnam and Mongolia. POSCO listens carefully to the voices and has been giving helping hands for those who need appropriate measures to overcome currently facing difficulties. For this reason, POSCO is carefully designing New Community Movements so the communities can genuinely benefited from the corporate’s social responsibility activities in Africa and Asia.

Supporting next generation farmers’ training in Mozambique and Zimbabwe

In cooperation with the KOICA (Korea International Cooperation Agency), POSCO is managing Agriculture Training Facilities in Mozambique and Zimbabwe, supporting those who dream of becoming proud farmers to revitalize the nations’ economy. Mr. Nelson, who is amongst the first graduates of the program, expressed his gratitude for the training he received as it changed the course of his life completely.

Before coming to this training facility, I was like a piece of white paper, with no knowledge or skills whatsoever. Now, I know how to do farming and breeding livestock. I’ve become confident of getting paid for the works I do.

Since the facilities opened their doors in February, 2012, the number of people achieving new dreams and futures is increasing in Africa. POSCO has continuously been supporting the registered students with educations for New Community Movement spirit and advanced agriculture technologies so they can economically stand on their own feet.

New Community Movement Leaders build new villages in Ethiopia

POSCO, the KOICA and Gyeongsangbuk Province jointly dispatched a volunteer group, the New Community Leaders to Ethiopia. They are visiting local villages with poor surroundings to build new fire pots and chimneys. In 2012, the News Community Leaders built about 150 fire pots in three Ethiopian villages to improve their quality of life. Also, they are teaching the people to learn how to farm, sew and breed livestock so they can have competences to earn their own livings.

Myeong-ki Hong is one of the New Community Leaders in Ethiopia. For ‘Hello, POSCO’, he shared his experience and sentiments from volunteering for the initiative.

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Q. Can you tell us about your mission in Ethiopia?

[dropcap style=”1″ size=”3″]I[/dropcap] mainly work with the locals on teaching sewing skills. The sessions are headed by an Ethiopian tutor and my job is to prepare necessary kits and set regulations for the education program. I am also in charge of accountancy to deal with banking issues. In Ethiopia, the system is not at the level you would expect and sometimes it takes more than three hours to have your turn. But, I find it quite amusing because the people working in banks are really friendly to me. Maybe they find me interesting because I am a foreigner.

Q. When did you find your stay in Ethiopia most worthwhile?

[dropcap style=”1″ size=”3″]T[/dropcap]he village and our basecamp are quite far away from each other so we need a car to move from one place to another. When we are travelling by cars, the villagers wave their hands with welcoming sentiments. It wasn’t like that when we first got here because they were not familiar with foreigners like us. The locals, who used to be uncooperative, are now working with us really well with great enthusiasm. Whenever I see this, I feel a great joy with a thought that “We are genuinely living with the locals.”

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Asia, improved living condition and quality of life

POSCO is also engaging with various parts in Asia wherever our helps are needed. POSCO is introducing a series of social responsibility activities in order to help the locals to improve their quality of life and ability for self-reliance. In Vietnam, POSCO, POSCO Vietnam, POSCO Special Steal and POSCO ICT are closely working together to construct ‘Dream Village’ in Bà Rịa–Vũng Tàu Province since 2011.

We have also established a local development education center in Jargalant in Mongolia to help nomads living in the area to maximize their profits from farming. A remote village in Indonesia was also reached by POSCO as we worked together to repair an old school and the surroundings to improve their living condition.

POSCO’s global New Community Movement has also been selected as the superb case for CSR activities. As we have witnessed above, POSCO’s kind and loving hands are embracing Africa and Asia, delivering hopes for everyone. POSCO is planning to expand New Community Movement to other regions and ‘Hello, POSCO’ will follow the track.