POSCO starts Mongolia energy projects

ULAN BATOR ― POSCO, the nation’s top steelmaker, is stepping up business development in non-steel areas in mineral resource-rich Mongolia. The energy business, along with materials, is a new growth engine for POSCO.

In a press conference held in Ulan Bator last week, POSCO unveiled the detailed plan to build a coal-to-liquid plant, which converts coal to liquid fuel, in Baganuur, a city about 150 kilometers northeast of Ulan Bator. POSCO developed the plan with local partner MCS Group, the largest conglomerate in Mongolia.

“POSCO and MCS completed a feasibility study for the $2 billion project and set up a 50:50 joint venture firm called Baganuur Energy Corp. We are expecting to break ground to build the CTL plant next year after financing the project,” said Won Gang-hee, general manager of POSCO’s Mongolian office. The Mongolian government has supported POSCO’s CTL project as it will produce less carbon dioxide than the existing coal-powered plants and will cut imports of petroleum from Russia, Won said.

When the CTL plant is completed around 2018, it will produce 450,000 tons of diesel oil and 100,000 tons of dimethyl ether per year.

“The plant-building project appeals to POSCO in terms of profitability. Along with the fast-growing economy, Mongolia’s oil consumption is forecast to rise to 3.5 million tons by 2020 from last year’s 800,000 tons,” Won added.

Besides the CTL project, POSCO also will enter the power generation business in Mongolia. A consortium led by POSCO Energy, an affiliate of the steel company, was named a preferred bidder for a 1.5 trillion won ($1.34 billion) thermal power plant project in Mongolia on Aug. 26 after beating another consortium led by Samsung C&T and Korea Southern Power.

“The POSCO-led consortium will build a 450-megawatt coal-powered power plant by 2017 and it will also be responsible for the plant operation for 25 years once construction is completed,” the company said in a press release.

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