To start, POSCO’s Q3 consolidated sales amounted to KRW 15.361 trillion, its operating profit KRW 1.1257 trillion, and its net income KRW 906.6 billion.

It also noted that sales increased by 0.6 percent, its operating profit by 15 percent, and its net income by 71 percent QoQ. The figures reflect the improved performance of its non-steel affiliates, including its energy and ICT division, as well as the enhanced results of its domestic and overseas steel business.

To add, the improved performance of its principal overseas steel subsidiaries contributed to the overall increase in operating profit. The operating profit of its Chinese stainless steel production subsidiary, Zhangjiagang Pohang Stainless Steel, totaled KRW 53.8 billion, up 572.5 percent QoQ, and PT.KP, the integrated steel mill in Indonesia reported an operating profit of KRW 8.8 billion, marking a big turnaround. The operating loss of POSCO SS VINA, its shape steel plant in Vietnam, was greatly reduced.

POSCO’s separate sales increased by 1.7 percent QoQ to KRW 7.255 trillion, and its operating profit rose by 23.4 percent to KRW 721.8 billion. Its net income also increased by 43.3 percent QoQ to KRW 729.9 billion.

POSCO’s financial results continued to show improvements. Its consolidated debt ratio dropped down by 1.5%p QoQ to 68.1 percent, the lowest ever since 2010, and its separate debt ratio was 16.3 percent, the lowest ever in POSCO’s history.

Moreover, POSCO’s consolidated and separate sales projections increased by KRW 4.7 trillion and KRW 3.2 trillion, respectively, to KRW 59.5 trillion and KRW 28.8 trillion compared to its plans at the beginning of the year.

Steel demand looks to continue based on the restructuring of the Chinese steel industry, along with the anticipated robust growth of demand in emerging and developing countries. POSCO plans to make continued efforts to generate revenue by securing financial strength, reducing costs and increasing the sales of its high-value-added products.

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POSCO’s smart safety features

As a steelmaking company, POSCO has been working towards becoming a “Smart POSCO”, or incorporating the implementation of AI into their production practices. In 2016, POSCO established a Smart Solution Council to research AI, big data and IoT applications. To date, the company has achieved a cost reduction of USD 14 million with the new technology. Even as one of the first steel producers in the world to implement a smart factory for production, the road ahead is a long one. Members of the discussion panel at the 2017 Smart POSCO Forum offered their expert opinions on how companies should move forward with AI research and applications.

Problem Mining

“One of the biggest difficulties in applying AI to manufacturing companies is problem mining. The only way to solve a problem is to find it and define it.” Kim Byung-In, a professor at the POSTECH Department of Industrial and Management Engineering, started off discussions and added, “Along with problem mining, people can learn from the past with reinforcement learning. Reinforcement learning means learning through similar tasks from the past to apply to new assignments. Defining problems and solutions more precisely and systematically managing related keywords can be useful for future tasks.”

Professor Zhang Byoung Tak, an AI professor at Seoul National University and a distinguished professor for POSCO added, “Traditionally, people solve problems, but in the generation of AI, AI will be able to solve problems for us… People now have to focus on defining problems, implementing systems and getting the right kind of data.”

Cooperative Research and Investment

Along with defining the exact problems that AI can provide solutions for, the implementation of AI will also call for a new working culture for companies and industries.

Tech company VUNO CTO Jung Gyuhwan stated, “Each company has its own production or operation method, and different data formats and protocols, but product inspection and screen UI (User Interface) are common areas. If we can find such common areas that can be commercialized and continue to research ways to expand AI applications to different sectors, we can achieve meaningful results together.”

Researchers developing programming and coding technologies

Jung went on to highlight that most AI personnel are unfamiliar with manufacturing. In particular, steel production terms are so difficult that it takes a considerable amount of time to share and understand information. There are also numerous obstacles and obligations for startups entering an unfamiliar development environment full of regulations and restrictions on things like the use of codes.

“In other words, task efficiency is a trade off with information security. I believe that if there is such a process in POSCO where the risk of technology leakage is not high, it will speed up results through collaboration with start-ups. POSCO ICT in Pangyo is a good place for startup employees to work. If we can take advantage of the POSCO ICT databases, collaboration with start-up companies will be easier. As of now, there are not many AI companies in Korea that specialize in manufacturing. Most people don’t even know that there is a lot of data available in the manufacturing industry. That’s why fostering start-up companies specializing in manufacturing now, is a good idea.”

Google’s Fei-Fei Li announces Google’s acquisition of Kaggle. (Source: Venture Beat)

According to CB Insights, M&A (mergers and acquisitions) of AI startups have increased 700 percent since 2011, because they are more efficient and often more insightful when it comes to AI research. Besides investing in existing startups, members of the panel agreed that collaborative competitions such as Kaggle, a contest platform where data scientists from around the world participate in solving problems in industry and society, are a great place to find talent and foster them as start-up companies.

Tackling New Challenges

The flurry of activity around AI research shows just how new the sector really is. People are still finding ways to apply AI across different sectors and industries. In such a volatile environment, how do companies and researchers navigate their way forward?

According to Choi Heeyoul, a professor of computer science at Handong Global University, companies need to “start where the people, problem definition and data are ready. Whether it is in production, sales, distribution, etc., if there is the will to solve problems, then results will follow. Especially when collecting data, you need the help of data analysts. For example, classification data for different types of steel can only be analyzed if the history of the classification criteria is recorded. Speech recognition is not any better for AI application than other fields, yet the most active and productive research has been completed in this sector. This is attributable to the will to apply AI, the abundance of accurate data and close cooperation with data analysts.”

Obtaining accurate data is vital for AI research

Professor Zhang Byung-Tak had another approach to offer. “I hope people will boldly take on challenges. The dramatic increase in computing power can now enable attempts that were previously considered reckless…No matter how much data we gather, it will never be enough. We need to approach problems as experiments and just start. One way to go about it is to work in reverse instead of waiting for data to be accumulated. You can start the task to define the data that is needed and determine the coherence of the data to the task.”

Lee Jong-Seok, a Professor at Sungkyunkwan University added, “When we are defining problems, we need to separate them into ones that can be solved in the short term and ones that require long term solutions. Some problems can be solved with minor improvements, while other problems will persist. For the latter, it is important to have patience and invest in a solution over a long term.”

That’s exactly what manufacturing companies are doing. They are collecting data every stage of production all the way to sales and administration. Big data is now available to study and apply to boost companies’ efficiency, sustainability and performance. Those who come up with the optimal software and modeling systems for data analytics will win the competitive edge early on.

UNIST professor Choi Jaesik echoed the panel’s sentiment, in closing, saying, “It’s very uncommon for a manufacturing company to hold AI courses for all their employees. I think POSCO can take pride that…POSCO is a great place to apply AI and achieve results. There is already plenty of data on site and employees are continuously working to obtain more accurate data. I look forward to seeing what POSCO will bring to the advancement of AI.”

POSCO CEO Kwon Ohjoon plans on doing exactly that, by increasing investment in research and implementing AI technology where applicable. Read more on POSCO’s smartization efforts here.

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The Matarbari power plant construction project includes the construction of a 1200㎿ (600㎿ x 2ea) coal-fired thermal power plant on Matarbari Island, Chittagong, approximately 280km southeast of Dhaka, the capital of Bangladesh. Site improvement and port construction are also part of the project, expected to last 7 years. POSCO E&C invested a total of USD 4.5 billion in this project which is the largest coal-fired thermal power generation project in Southwest Asia. POSCO E&C is in charge of civil engineering for the power plant worth USD 840 million and the construction of the coal processing facilities and subsidiary facilities.

The Bangladeshi government and the Japanese government have been working together on this project as a means to speed up the low electrification rate of Bangladesh. The Sumitomo Corporation Consortium, which has been cooperating with POSCO E&C, won the contract last month from the project owner Coal Power Generation Company Bangladesh Limited.

POSCO E&C also recently won the contract to build the Yangon Waterworks Improvement Project in Myanmar worth USD 53 million. POSCO E&C selected Myanmar as one of its 5 strategic countries, and built the Yangon Hotel, the tallest landmark building in Myanmar. It is now accelerating its efforts to make inroads into the Myanmar construction market. Both projects are funded by the Japan International Cooperation Agency.

POSCO E&C President Chan-geon Han said, “We won this contract thanks to our world-class EPC technology and expertise, which has been recognized in the Central and South American energy plant markets. This contract is all the more meaningful because we won it at a time of declining overseas business due to a dip in international oil prices.”

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High-Quality Steel Products Keep POSCO Competitive in China

In China, several factors have led to more difficult market conditions. Can you tell us about what it is that POSCO is doing to stay competitive in China? How do POSCO’s steel products compare to those from other companies?

Kim Huyn Ah: POSCO has done several things to remain competitive. First, we have focused our attention on creating high-quality World Premium Products. As you know, there is a lot of low-priced, low-quality steel, but our World Premium Products stand out because we are able to make them consistently and without defects. Secondly, POSCO has positioned itself near other key industries. For example, our machining centers in China are located near other large international car manufacturers like GM and Volkswagen. So, even when market conditions go south, there is always stable demand simply due to the geographic proximity.

Yuan Feng: In mid-2015, our production output of World Premium Products was around 30%. By 2016 that had increased to 49%, and as of January 2017, our total output consists of 55% World Premium Products. As Huyn Ah said, other companies can make similar products, but no one can do it at our speed and consistency. Our customers rely on that.

Wang De Hui: Because of the overcapacity of steel, things were difficult for a while, but they are getting better. We get our raw materials from HQ, and because our raw materials are better we can provide better products. And actually, the abundance of low price, low quality steel ended up creating more demand for our advanced, high-quality steel products.

We are committed to maintaining higher quality products. Each year we analyze the steel to make sure the raw materials and production processes are better, more advanced, and with fewer impurities. I know the difference between our materials and our competitors. What we get from Korea is just better.

Better Customer Service with Solution Marketing 2.0

In addition to producing high-quality steel, how does POSCO stand compared to other steel companies? What is it doing to keep customers satisfied?

Kim Huyn Ah explains the importance of POSCO’s high-quality products in China’s market

Kim Huyn Ah: At POSCO, when questions come up, or if a problem occurs, we do our best to find a solution as soon as possible. Through POSCO’s Solution Marketing 2.0, we provide our customers the tools they need to maximize convenience and efficiency in utilizing high-quality steel.  Solution Marketing 2.0 is practiced under three strategies: digital solution marketing based on advanced IT technology; innovative solution marketing that focuses on speed, value and quality; and tailored solutions that provide comprehensive support for each customer. This process helps our customers understand the balance between a product’s features, price, and long-term benefits.

Also, we work hard to provide products to clients on time and on schedule. It is one of the most basic parts of our job, but oftentimes one of the most difficult to control due to floods, typhoons, or other things that are out of our control. Customers demand more, so at POSCO CSPC we have made production systems management a priority so that we can deliver our steel products on time. Because of these improvements, we have been able to meet delivery times more effectively than other steel companies in the area.

Yuan Feng: Huyn Ah really touched on a lot of the important points for us, but I would like to add that POSCO now has an entire department dedicated to service. Now we are able to listen to customers more effectively and respond to their questions and feedback more quickly. We do our best to solve problems as quickly as possible.

Wang De Hui: The Chinese steel market has grown very quickly. Because POSCO is almost 50 years old, we have a better understanding of service and quality. That being said, our competitors in China are learning fast. We must continue to adapt and be competitive. Last year, POSCO set up a Solutions Marketing program to promote high-quality products and customized solutions. Our customers really appreciated that we had higher quality products and were willing to work with them for individualized solutions.

POSCO Fosters Employee Development

All of you are in Korea participating in POSCO’s Global Mobility Program (GMP) where you are able to collaborate with other POSCO employees from around the world while developing new skills at HQ. As part of the management team in China, how has POSCO helped you grow in your career?

Kim Huyn Ah: It is helpful for me to take part in the Global Mobility Program. Seeing HQ and how they work helps us understand the full system process better. Also, as a Korean, I am often in the middle between HQ and our local Chinese office. It can be difficult to understand communicate to both sides effectively. But POSCO has supported me in my career and this experience will help me have a better understanding of the work process in Korea.

Yuan Feng explains the significance of being able to get training at POSCO HQ. His work in maintenance is critical to maintaining smoothly running factories that deliver POSCO’s steel products on time and without defect.

Yuan Feng: I joined the Global Mobility Program because I wanted to learn more. My department is new; it was just formed last year so I want to see more about POSCO and how it works. I think the GMP gives me the opportunity to develop more as an employee, but also in other ways as well. For example, I can have the chance to work with people from other countries and learn about their cultures as well. When I first started, I had to work with some people from Indonesia. We both had a bit of trouble understanding each other, which is natural. However, after we learned about each other’s cultural backgrounds we could understand each other much better.

I will be in Korea for 6 months. During that time I want to create a new system for our Maintenance Department so that it can be more stable and strong. In addition, because it is a new department there needs to be a systematized program for development. We have done well since last year, but we have bigger goals and we want to do more.

Wang De Hui: This is an exciting opportunity for me. I want to improve my skills and do more with POSCO. Being a quality control specialist, I’m responsible for collecting data and measuring performance and customer choice. It is important for me to know how these things are done at HQ so we can improve our efforts in China.

POSCO is Tops in CSR in China

POSCO has won many awards around the world for its CSR work. In particular, it recently won one of the top awards for Corporate CSR work in China. Have you participated in any of POSCO’s CSR events? What effect do those activities have on the community?

Kim Huyn Ah: At POSCO CSPC we have a CSR department that organizes several activities. We have events to plant trees, visit nursing homes, and help out at homes for disabled children. My most memorable experience was when I visited a home for disabled children. When we visit, they greet us so warmly and show so much gratitude.

Wang De Hui has seen the impact of POSCO China’s CSR work

Yuan Feng: At our office, we participate in several CSR activities. We help out with environmental initiatives and with the local communities around the factory as well. We support 3-4 families regularly with supplies and help them with simple things like painting their houses. We sometimes go on trips with them. In the beginning, we would simply donate money, but after seeing the benefit to the communities, and for the staff as well, we are becoming more and more active with CSR activities.

Wang De Hui: At POSCO Qingdao, we organize an event every month. It is well attended by our staff as even our general manager and department managers go. I’m glad we do things like this and I enjoy participating. We mainly go to help out at public nursing homes and schools for the deaf. We also raise money to buy basic needs, such as food, clothes and home appliances. Activities like this have given POSCO a good reputation in the local communities, which is important.

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However, the Amazon is under constant human threat as deforestation continues to increase with the expansion of industry and agriculture, as well as the growing number of natural disasters, including the drought that plagued San Paulo last year. But one team of scientists and researchers is going to great lengths (and heights) to better understand climate change and the effect it is having on our world.

Into the Jungle

To better comprehend the key roles the Amazon plays on a local, regional and global scale, a German-Brazilian joint project was initiated in 2008. It was coordinated by the Max Planck Institute, the Brazilian National Institute of Amazonian Research and Instituto Nacional de Pesquisas da Amazônia (INPA).

The central objective of the project was to build the Amazonian Tall Tower Observatory (ATTO), a scientific research tower, in the heart of Brazil’s Amazonian rainforest, hundreds of kilometers away from the closest city—and subsequently any anthropogenic influence.

Now the tallest structure in South America, the mast aims to collect data from a 700-kilometer radius for four kinds of research, including chemical changes in the atmosphere, the formation of clouds, the types and quality of pollen and the effect of global warming on photosynthesis by plants. By monitoring such changes, researchers are hoping to see how climate change is contributing to extreme weather events over the next 30 years.

Steel—A Tower of Strength

But constructing a giant tower in the middle of the isolated and often unforgiving Amazon was no easy feat.

It was essential that the material selected for the tower’s construction would be able to withstand the tropical conditions of the rainforest. Steel’s strength, combined with its unique versatility and lightweight properties, best met engineers’ requirements for the structure.

As a result, approximately 120 tons of steel were used to build the 142-ton, 325-meter-tall tower.

The steel structure of the ATTO tower was transported 4,000 kilometers by road and river from a steel plant in southern Brazil, and up a dirt track into the depths of the forest. This track, which was created specifically for the project, allowed for the successful transport of some 15,000 tower components to the construction site.

At the site, each of the various tower elements had to be lifted and assembled using 24,000 screws and bolts, while 26 kilometers of steel cable was needed to safely anchor the tower to the rainforest ground. Overall, the ATTO required the manpower of 30 workers and took about four months to complete.

Getting to the top of the 108-story-high structure takes an hour and a half; scaling it requires scientists and workers to lock carabiners onto a steel cable which runs continuously along the stairs of the superstructure like a handrail. At platforms on the way up, researchers can access the measurement equipment that collects data.

The tower was officially inaugurated last August and in the coming months, it will be equipped with additional instruments before the actual measurements will start by the end of this year.

Better Understanding for a Brighter Future

The ATTO complements the Zotino Tall Tower Observation Facility (ZOTTO) in Siberia, Russia, which was also built in partnership with the Max Planck Institute in 2006. The cable-stayed steel truss mast that boasts inlet pipes made of stainless steel has been used for greenhouse gas and aerosol monitoring.

It’s the hope of scientists that steel towers like ATTO and ZOTTO will provide a clearer understanding of the role played by various ecosystems most crucially in the context of climate change. This, in turn, could transform the remote, untouched corners of the world into areas of global importance unlike ever before.

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The recognition ceremony was hosted by the Korean Academic Society of Business Administration and Maeil Business News on October 18 at the Shilla Hotel in Seoul. It took place as a tribute to the distinguished services rendered by various enterprises and entrepreneurs that served as the driving force behind Korea, helping the country become one of the top 10 economic powers of the world.

In the enterprise category, the elected companies included: Samsung Electronics, CJ Cheil Jedang, Amore Pacific, SK Telecom, LG Chem, Hyundai Motor Company as well as POSCO. People who were inducted into the entrepreneur category included: Taejoon Park (the honorary chairman of POSCO), Inhoe Koo, Kunhee Lee, Byungchul Lee, Mongkoo Chung, Juyung Chung and Jonghyun Choi. Among the inductees, Taejoon Park is the only member who is not an enterprise owner-manager, making his achievement a unique and remarkable one.

At a time when POSCO lacked experience and technological means, Park, armed only with the conviction that “Steel is the rice of industry, and that we must make the country rich by making cheap quality steel,” erected the integrated steel mill at Yeongil bay of Pohang, which was a wasteland at the time. Living up to his motto of “I shall dedicate my short life to the eternal fatherland,” he transformed POSCO into a steel mill in 1992 that produced 21 million tons a year. Just 25 years later, he created a stable steel supply system.

Thanks to POSCO, steel-consuming industries such as the automobile, shipbuilding and construction industries, secured superior quality and cost competitiveness to become the leading enterprises of today. One story often told in Korea in industry circles involves the Chinese Community leader Deng Xiaoping. He visited the Nippon Steel Corporation in Japan in 1978 and asked the company’s chairman Yoshihiro Inayama to build a steel plant in China similar to POSCO’s. In response, the Nippon Steel chairman told Deng that “it won’t do you any good unless China has a manager as good as Taejoon Park to run it.”

This anecdote gives us an idea of Taejoon Park’s success story and his reputation as an indomitable driving force. Through his vision and dedication, the honorary chairman spearheaded POSCO’s transformation into the world’s most competitive steelmaker, and laid the foundation for Korea to become a powerhouse in the heavy and chemical industries.

POSCO and its honorary chairman Taejoon Park were elected into the ‘Korean Business Hall of Fame in the entrepreneur and enterprise categories at a ceremony held on October18 at the Shilla Hotel in Seoul. From the left, Changjo You (chairman of the Korean Academic Society of Business Administration), Daehwan Jang (chairman of Maekyung Media Group), Taehee Woo (vice minister of Trade, Commerce & Energy) and Eunyeong Hwang (the CEO of POSCO) can be seen posing for a picture at the ceremony.

“It was the entrepreneurship and can-do spirit of the founders, including the honorary chairman Taejoon Park, that made POSCO the most competitive steelmaker in the world,” said Professor Jinbae Kim of Korea University, who presented POSCO at the ceremony that day. “I sincerely hope that POSCO employees will do their best to enable the company to maintain its status as the best steelmaker in the world by taking in this spirit of entrepreneurship and engraving it in their DNA.”

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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.

-Declared the 4 part innovation agenda that includes enhancement of steel competitiveness and financial structure to address crisis management

-Headed to steel plant immediately after inauguration ordering “world’s best products with competitive costs and quality”

Pictured here: POSCO’s Chairman, Ohjoon Kwon giving his inauguration speech at the Pohang headquarters on March 14^th

POSCO’s Chairman, Ohjoon Kwon has officially been inaugurated. On March 14, POSCO held its annual meeting of shareholders and board of directors to install Ohjoon Kwon as the 8^th Chairman & CEO. Following the shareholders meeting, he attended an inauguration ceremony at the Pohang headquarters wearing a Steel plant uniform and stated, “Oversupply in the global steel market puts a significant risk to POSCO’s competitive advantage” and therefore, “We need to regain our steel competitiveness based on the differentiated technology and a financial and organizational structure reform  to once again become the world’s leading steel company.”

Pictured here: POSCO’s Chairman, Ohjoon Kwon giving his inauguration speech at the Pohang headquarters on March 14^th

At the inauguration, CEO Kwon unveiled the new vision ‘POSCO the Great’ and stated that to achieve this, the ‘innovation POSCO 1.0’ would be actively promoted. ‘POSCO the Great’ implies ‘Let’s create a great POSCO’ and signals that the company will continue to contribute to the national economic development and create values for the world in order to become the most respected company nationally as well as globally. Reflecting Chairman Kwon’s philosophy and volition, POSCO 1.0 proposes a departure from pride and appearances and a return back to basics to regain unity and be the forerunner again. The goal is to become the world’s best in all business divisions by creating customer value through new ideas and unifying all employees under one vision.  Chairman Kwon announced a four part innovation agenda in order to quickly overcome the current crisis situation and prepare for the next 50 years of POSCO.

Pictured here: POSCO’s Chairman, Ohjoon  Kwon at the inauguration with ‘POSCO the Great’ and ‘innovation 4.0’ banners in the back ground

The first priority on the innovation agenda is to enhance the competitiveness of the steel industry. Its main focus is to create new, differentiating customer value through the combination of technology and marketing. The Company will create a Steel Solutions Center within the steel business division  to provide proactive response to customer needs and, also it will increase the sales of strategic products such as marine energy steel, high performance steel plates to cement its market position as a leading global steel company.

The second priority is to focus on the selection and concentration of plans that promote future growth. POSCO has been pushing ahead in materials, energy and other diverse new businesses, however going forward it will analyze business fit, core competencies, and market attractiveness to boldly determine whether to stop, sell or merge businesses for those businesses that are not globally competitive.  It will concentrate its growth energy in developing materials such as lithium and nickel that are essential for the future high-tech industry, as well as eco-friendly chemicals such as fuel cells and clean coal that are core of the clean energy business.

The third priority is to streamline the business structure and to dramatically improve the financial structure. For the time being, investment strategy will be focused on value-added growth rather than new investments for qualitative growth. Furthermore, at the appropriate time, it will list on the stock exchange certain subsidiaries that meet the IPO requirements or sell the equity holdings in order to maximize liquidity.

Finally, the management infrastructure will be reformed in areas such as internal organization, processes, and corporate culture . The current six divisions will be minimized to four for greater efficiency and to streamline decision-making hierarchy within the company. Furthermore, the number of executives in the supporting divisions will be reduced by 40% and transferred to marketing, steel mills, overseas offices and other divisions in order to boost performance. Especially, in order to promote strong performing organizational structure, individuals that hold expertise and experience will be appointed as expert executives and will be assigned to individual project with appropriate accountability and performance evaluations.

Pictured here: POSCO’s Chairman Kwon shaking hands with employees on the day of his inauguration

Shortly after the inauguration, Chairman Kwon paid a visit to #3 steelmaking plant in Pohang and encouraged employees with an indication of his management priority in the job sites. Steel plant furnaces are the heart of steelmaking companies as the filtered impurities from molten metal are transformed into high quality, top grade steel. On this day, Chairman Kwon announced, “POSCO will continue to invest in innovation in order for Pohang and Gwangyang Steelworks to once again produce the world’s best products with competitive costs and quality.”

 Pictured here: POSCO’s Chairman, Ohjoon Kwon visited workers at #3 steelmaking plant in Pohang shortly after the inauguration to reassure employees that he would help make POSCO the world’s best

Earlier, at the annual meeting of shareholders and board of directors, candidate Jinil Kim was appointed as in-house director and president of steel manufacturing, and Dongjoon Yoon and Younghoon Lee were both appointed as vice president in-house directors. Moreover, Ilsup Kim, President of Seoul School of Integrated Sciences & Technologies, Youngsun Woo, Executive Partner at law firm Seah, and Donghyun Ahn, Professor of Economics at Seoul National University were appointed as outside directors. Ilsup Kim and  Youngsun Woo will also assume the responsibility over the Audit Committee members.

See below for the full inaugural speech that Chairman Kwon gave.

[box]Fellow colleagues,

Valued shareholders, customers, stakeholders,

Ladies and gentlemen,

I am truly honored and thrilled to stand here today as the 8th CEO of POSCO. In my excitement, I also acknowledge the large responsibility I have to follow in the great success of POSCO’s past generations.

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Looking back to previous years, I can see the noble vision of the founders of POSCO. The first generation of this outstanding company strived to make something out of nothing, to build a solid foundation for our company in accordance with the direction of this nation.

Moreover, the following generations, armed with a passion for technology development and innovation, contributed to POSCO becoming one of the most globally competitive steelmakers in the shortest time in history.

With our unmatched commitment to staying competitive, POSCO has continued to create sound profits and consistent value. Furthermore, in the spirit of mutual partnership, we have shared growth with our various stakeholders. Such efforts have boosted Korea`s economic development, and have been praised by the Korean people.

Members of POSCO!

POSCO, once the pride of the nation, is now in the midst of unprecedented challenges. With credit ratings being downgraded and share prices being weakened, “expansion” may no longer be our highest priority. At its worst, survival of the company itself could be threatened.

As I begin my term at this important juncture, I ask a few questions to both myself and to all POSCO employees.

Do we still have the same passion and sense of duty that we used to have toward the nation’s economic development?

Do we still have our spirit of embracing challenge, embodied in our slogan “Resources Are Limited, Creativity Is Unlimited”?

Is our spirit of self-sacrifice still alive in placing our company and our country before ourselves?

Fellow colleagues,

As members of POSCO sharing the same fate, none of us are free from the current crisis. We all have to avoid living off of past glory. We must now dedicate ourselves to a fresh start and a new direction.

As of now, there are a number of urgent issues that we must resolve.

While the global economy is expected to remain stagnant for the time being, the steel market has long suffered from serious oversupply. Under such circumstances, we can no longer resort to our traditional competitive edge.

Meanwhile, our global expansion projects, once enthusiastically promoted, have yet to be settled. What concerns me even more is these projects may become a burden to the company depending on how the market unfolds.

Members of POSCO,

I would like to take today`s inauguration ceremony as an opportunity to declare our new corporate vision, “POSCO the Great.”

“POSCO the Great” refers to a POSCO that continuously contributes to the country`s economic development and is ultimately loved by the Korean people. We can achieve this goal through the following three values – Creativity, Harmony, and Top class management.

“POSCO the Great” also refers to a POSCO respected internationally by consistently creating new customer value and growth engines based on steel, POSCO’s core strength.

Today, I propose the key program of “Innovation POSCO 1.0” that will drive our corporate vision of “POSCO the Great.” The “1.0”  in “Innovation POSCO 1.0” represents being New, being Unified, and being No. 1.

“Innovation POSCO 1.0” aims to create customer value through “New” ideas, “Unifying” all of its members under the same vision, and with POSCO being the world’s “No. 1” company in all its business sectors.

Respected members of POSCO!

“Innovation POSCO 1.0” is an urgent plan to swiftly overcome the current crisis, but more importantly, it is a plan to prepare for the 50 years ahead of us.

Under the “Innovation POSCO 1.0” program, we have four initiatives.

First, we will fundamentally strengthen the core competitiveness of the steel business through technology-based solution marketing.

We will launch a Product Solution Center within the Steel Business Division to preemptively respond to potential needs of our customers.

We will fortify our status as the global top supplier in our seven key product domains which include steel products used in the energy industry; this emulates our past achievement of securing global leadership in the ultra-light automotive steel business.

We will transform Pohang and Gwangyang Steel Works into the world’s most competitive manufacturing sites by further intensifying our unique innovation capabilities and rooting out all the safety and environmental risks.

Overseas steel projects in regions such as India and Indonesia will be stabilized as early as possible by actively cooperating with partnering companies based on our spirit of shared growth and prosperity.

Second, we will nurture future mega-growth engines through strict selection and concentration among our non-steel business segments.

New projects currently being pursued in the fields of materials, energy, and other various areas will undergo a rigorous process of re-evaluation.

Our business feasibility assessment based on technology and market competitiveness yielded the tentative result of  “core materials” and “clean energy” as our potential mega-growth engines.

“Core materials” are essential ingredients for future high-tech industries, with Nickel and Lithium as promising candidates.

In the area of “clean energy”, technology in response to global warming, fuel cells and clean coal chemicals are promising candidates.

Just as we used steel, “the Rice of Industry”, to lead the economic development of Korea, we will usher in the new era of “Creative Economy” by generating more jobs in the sectors of “core materials” and “clean energy.”

Third, we will streamline our business structure and significantly improve the financial soundness of POSCO.

To maximize the synergy in each business segment, we will manage our key subsidiaries more effectively while massively trimming out non-core businesses.

Rather than pursuing expansion-oriented investments, we will adhere to high value-add investments, which will have a profound positive impact on our enterprise value.

We will move to lower the risk on our ongoing investments by inviting and cooperating with strategic and financial investors.

As for the suitable subsidiaries, we will file for an IPO at an appropriate time depending on the capital market situation. Our equity holdings in subsidiaries could be reduced to secure sufficient liquidity.

Furthermore, we will strengthen our communication with the capital market so that we can earn trust from investors.

Fourth, we will overhaul our management infrastructure such as organization, systems, processes, and corporate culture.

We will ensure that our organization will function more efficiently by downsizing the current six divisions into four divisions and simplify organizational hierarchy to streamline the decision making process.

In addition, we will curtail the number of executives in supporting departments, and some of the back office employees will be relocated into the value creating front line such as marketing, production and overseas sites, thereby producing higher financial outcomes.

Any employee who has generated additional profits by proposing and completing a challenging project will be given corresponding incentives.

We will also discard the “insider-only” practice and “the sense of superiority” that have been prevalent in POSCO as remnants from the legacy of a steel monopoly.

Meanwhile, we plan to further upgrade POSCO’s proud tradition of sharing activities so that we can fulfill our responsibility as a corporate citizen.

Fellow colleagues!

We are about to embark on a grand journey toward “POSCO the Great.”

Although we are facing a steep cliff to our rear and a fierce storm to our front, we do not have the luxury of hesitation because time is not on our side.

Fortunately, the path ahead of us is not all too unfamiliar to us.

Engrained deep within our DNA are the memories of great achievements during the days where we thrived without any capital, technology, and experience.

For the future of a reunified Korea and for another 50 years of POSCO, let us fortify the stepping-stones so that our next generation can continue to build upon the history of “POSCO the Great.”

When “POSCO the Great” is finally realized where POSCO is loved by the Korean people and respected by the citizens of the world, we will later look back to the cliff and storm of today and see that these were only part of a short-lived prelude to the great achievement of our vision for the future of POSCO.

Let us embark this new journey together for our greater POSCO.

I express my deep gratitude to the members of POSCO who have dedicated themselves in our operations, with their trust in management. I pay tribute to your loyalty to the company.

Whenever we have faced difficult times throughout our 45-year history, our management and employees have fought together, in unity, to sail through each and every hardship. I am strongly convinced that we can overcome today`s crisis based on our triumphs of the past.

Last but not least,

I give you my firm commitment.

To our customers, suppliers, and partners, we will bring you mutual growth in return for your steadfast support.

To the shareholders and investors, we will reply with higher profits in return for your unwavering trust.

To the communities and the Korean people, we will respond to your warm encouragement by making POSCO your pride and joy.

Thank you. (End) [/showhide] [/box]

The busy Mexican automobile industry has ushered in a valuable new asset—a steel galvanizing plant from Korea.

On January 28^th in Altamira, Tamaulipas, POSCO completed construction on its second Continuous Galvanizing Line (CGL) in Mexico. The plant has added 500,000 tons of steel added to POSCO’s yearly capacity in the region. With its completion, POSCO has become Mexico’s largest producer of plated steel sheets for automobiles.

[box] What’s a Continuous Galvanizing Line? Almost nothing is stronger than steel—but without protection from water and weather, the backbone of the world’s industries will rust. Galvanization is the process of applying zinc coating to bare steel in order to prevent rust and make steel more durable. Steel can be protected from rust by paint or powder, too. But coating steel with zinc is more permanent. Galvanization means that even if steel’s painted surface is scratched off, it won’t corrode. Galvanized steel is therefore used for products that need to be extra durable—like cars. In a continuous galvanizing line (CGL), ribbons of fresh, newly-pressed steel are treated with zinc as they roll down a factory in a never-ending line. It’s kind of like a cafeteria line… if zinc were your lunch! Efficient, right? [/box]

In a ceremony commemorating the factory’s opening, POSCO welcomed more than 300 people, including Mexican government officials and employees from client companies like Toyota, Honda, Nissan, and Volkswagen. The ceremony was led by key figures like Egidio Torre Cantú, governor of Tamaulipas, Seonghoa Hong, Korean ambassador to Mexico, and POSCO’s own CEO, Joonyang Chung.

Chung addressed close partnership between Mexico and Korea as a major factor in the new plant’s success. “The 2CGL factory is an extension of the road to friendship that POSCO and Mexico have been developing since our Mexico office was established in 1981,” he said. “I would like to give my deepest thanks to the many government officials, client companies, and suppliers who made successful completion of this factory possible. POSCO will continue in its efforts to supply premium quality automobile steel plates.”

In recent years, Mexico’s role in the world’s automobile industry has jumped by leaps and bounds. Companies like Volkswagen, Chrysler, GM, and Renault Nissan entered Mexico chasing the country’s low labor costs as well as its proximity to the USA, which is the world’s second-largest automobile market.

Nearly 1,000 global parts companies followed, including Autotech and Benteler Automotive, giving Mexico’s production market some of the high growth potential in existence.

Now, the country is the world’s 5^th-largest automobile export country. Last year, it exported 2.4 million automobiles. Honda, Mazda, and Nissan are all upping their Mexican production lines for new steel plates as a result.

POSCO’s Role

2CGL, as the new galvanizing line is called, is POSCO’s second plant in Altamira. The company opened its first Mexican CGL in 2009. Combined, the two plants have 900,000 tons of automobile steel plate production capacity.

The main product of 2CGL will be a type of galvanized steel plate used in the exterior panels of high-end automobiles. The most in-demand products are the “GI Ace,” which has improved coating and processing capabilities, and the “780㎫ class AHSS steel”, a premium-grade steel plate that is lighter but more resistant to external impacts. The plates’ high quality and demand from the world’s leading automobile manufacturers is expected to add even more value to Mexico’s industry as a result.

In addition to its automobile steel plate factories, POSCO also has four steel processing centers in Mexico: POSCO-MPPC Plants 1, 2, and 3; plus POSCO-MAPC.

Contribution to the local economy and promotion of the automobile market are among POSCO’s major goals in Mexico. It also strives for sustainable growth in the local community.

A 500,000 ton annual capacity 2CGL factory in Mexico, completed by POSCO on January 28^th, 2014. With the establishment of 900,000 tons of production capacity in the country, POSCO hopes to secure a foundation from which they can lead in the local industry’s production of high added-value products.

On August 15, POSCO held a completion ceremony for a cold-rolled stainless steel plant called “POSCO Assan TST” in Izmit, Turkey. POSCO Assan TST, which will become the first stainless steel plant in the country, has an annual production capacity of 200,000 tons. With the completion, POSCO has now secured a production base at the west front of ‘U-Belt,’ a part of POSCO’s global UI development strategy across newly rising countries in Asia.

Turkey is a strategic point for entering the markets of Europe, Middle East, Russia, North Africa and the Commonwealth of Independent States. Recently, the nation has also been going through a rapid industrial drive from light industry to heavy industry basis. Renault, Fiat, Ford, Nissan, Honda and other major car manufacturers are operating businesses in Turkey and the local market itself is often referred as one of Europe’s top three home appliance consumer markets along with Germany and Italy. The demands for high quality cold-rolled stainless products are high due to these factors in Turkey.

POSCO Assan TST holds a significant meaning because, despite of such soaring demands for stainless products, Turkey did not have any stainless plant within the country and experts had previously suggested that a supply shortage reaching 1 million tons could occur by 2015. With the completion, POSCO will be able to take the advantageous position first in the Turkish market, and also react swiftly for the demands from the neighboring areas. Once the ITPC, an Italian stainless processing center starts operating next month, the two facilities will work together to create a sales synergy in the near future.

About 300 guests attended the ceremony to celebrate the completion of POSCO Assan TST, including CEO and Chairman of POSCO Chung Joon-yang, Turkey’s Minister of Science, Industry and Technology Nihat Ergun, Minister of Economy Zafer Caglayan and other VIPs from the Turkish government and POSCO’s partners. During his remarks, Chairman Chung said, “POSCO Assan TST is the essence of the long relationship between Turkey and Korea. I hope POSCO continues to be loved by Turkey and to grow in line with the local market for mutual prosperity.” While speaking with the Turkish government ministers, the Chairman also requested continuous supports for the cold-rolled stainless plant in Turkey, and in response, Minister Ergun and Minister Caglayan said the government will provide its full support for the plant.

POSCO Assan TST in Turkey is expected to be the key manufacturing plant for global production and sales network across China, Southeast Asia and Turkey, making POSCO be the leading stainless maker in the world.