One of the top Korean conglomerates I find fascinating is the Hyundai- Kia Motor Group. Most people are aware of its two auto companies Hyundai Motor and Kia Motors. The conglomerate is actually a highly intergrated Car Marker that sister companies range from parts manufacturers, to logistics, to car finance, to marketing... For decades the Chung family sought to produce its own steel. Government policy and mandates prevented entry into steel production. As Korea has moved from a state-run economy to a open market system, old barriers not longer hold Hyundai-Kia from entry into steel production.
Korea Herald notes...
Hyundai Steel Co. [formerly INI Steel] has reorganized itself in preparation of its first blast furnace which is scheduled for production in 2010.
The steelmaker - under the Hyundai Automotive Group - has set up new departments to support the blast furnace business, shortly after its chairman Chung Mong-koo was released from a two-month imprisonment last week.
From July 1, new teams have been charged with the purchase of raw materials such as iron ore, coal and soft coal as well as the necessary equipment. Previous purchases focused on iron scraps which were used in the electric furnace business.
The steelmaker's staff have been given various responsibilities to handle products such as iron bars, section steel and steel sheets. The marketing section is eyeing potentials for hot-rolled steel products.
In addition to a human resource reorganization and the recruitment of technical experts, Hyundai Steel has set up a "cooperation for coexistence" team to strengthen partnerships with suppliers.
"The entire staff reorganization is aimed at preparing ourselves for the blast furnace construction," Hyundai Steel's spokesman Chang Young-shik said. "Despite concerns that the chairman's absence might delay construction plans, there has been no setback and the project is now expected to roll with the chairman's release."
Plans to secure a stable supply of iron ore, the key material for the blast furnace operation, is also underway.
Chairman Chung Mong-koo had earlier planned to visit Brazil's Companhia Vale do Rio Doce mines this month to sign an agreement over the long-term supply of iron ore. With the chairman's release, the moves are likely to resume soon, according to company officials.
Hyundai Steel is also expected to order new facilities for the transportation of the raw materials. An affiliated construction company is building a 1,240-meter-long wharf for this purpose.
Hyundai Steel will operate their cold-rolled steel mill in Dangjin, 150 kilometers southwest of Seoul. The purchase of about half of the 700,000-pyeong site (a pyeong equals to 3.3 square meters) for the integrated mill has already been completed.
Contracts for long-term lease of large vessels are also likely to be signed soon.
Hyundai plans to begin commercial production of a hot-rolled steel plant in Dangjin. Its first blast furnace is scheduled to break ground within this year. The second blast furnace is slated to break ground in 2008. The first blast furnace will begin commercial production in 2010 and the second by 2011, the steelmaker said
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