Saint Laurent Stripped for Ad, Dressed Up Deneuve: Review

Yves Saint Laurent posed for a photo wearing nothing but his glasses.

The prince of haute couture, who died in June 2008, is the star of a Petit Palais exhibition that has had Parisians standing in line around the block. A year after many of his (and partner Pierre Berge’s) possessions were sold in the biggest single-owner auction of all time, the French designer retains a near-Messianic appeal for some.

(Bloomberg)

As exhibitions go, "Yves Saint Laurent" (through August 29) works well. Museums aren’t usually the best showcase for fashion: Clothes are made to be worn, not hung on mannequins, and they tend to turn pale and tatty with age.

Curators have avoided that faded look by designing the exhibition as if it were a fashion show or a film set. The first big room of Saint Laurent garments has a catwalk-like corridor running down the middle; as you walk up it, mannequins peer at you from either side. The spectacular final room of evening dresses -- a wide, red-carpeted staircase of gowns, plumes and bows -- might be a scene out of "My Fair Lady."

Through it all, the shy man with the fancy initials comes across as a bad boy who taunts the women he clothes. Though he designed mainly for the elite, he kept a close eye on the street, and redefined women’s wardrobes as lastingly as Coco Chanel did before him.

Appointed Dior’s head designer in the late 1950s, he topped off his timelessly elegant collections with a black bomber jacket of mink and crocodile skin (on view in the exhibition) -- a cheeky tribute to Marlon Brando in "The Wild One"(1953).

G20 agrees to delay exit strategies until private sector recovers

Finance ministers and central bank governors from the Group of 20 nations agreed Friday to keep stimulus measures in place until the recovery of the private sector is confirmed, Yonhap news agency said Saturday.

The news report said G20 finance ministers and central bank governors also vowed to complete the quota and governance reform of the International Monetary Fund by November, when their leaders gather in South Korea, quoting the communique issued in Washington.

James Flaherty, Canada's finance minister, right, listens as Yoon Jeung- Hyun, South Korea's finance minister, speaks at a news conference during the Group of 20 Finance Ministers and Central Bank Governors' meeting in Washington, D.C., U.S., on April 23, 2010. (Bloomberg)

"The global recovery has progressed better than previously anticipated largely due to the G-20's unprecedented and concerted policy effort. However, it is proceeding at different speeds within and across regions and unemployment is still high in many economies," said the communique read by South Korean Finance Minister Yoon Jeung-hyun during a joint press conference with his Canadian counterpart, James Flaherty. Yoon served as a subcommittee chairman during the Washington gathering.

"We recognize that in such circumstances, different policy responses are required. In economies where growth is still highly dependent on policy support and consistent with sustainable public finances, it should be maintained until the recovery is firmly driven by the private sector and becomes more entrenched," it added.

The communiqué came as debate is growing over the right timing of rolling back stimulus measures taken to fight the global recession in the wake of the global financial crisis in 2008.

Regarding bank levy, Yoon said the South Korean government supports the idea of taking “proper measures” against excessive liquidity expansion of financial institutions.

However, such measures should be carefully implemented not to hurt the real economy, he said.

He projected that G20 finance ministers and central bank governors will discuss details of bank levy in June in Busan.

Korea builds world’s longest seawall

The government yesterday announced the completion of the world’s longest seawall in a reclaimed tidal flat in Gunsan, North Jeolla Province, nearly 20 years after launching of the project.

An aerial view of the 33.9-km-long Saemangeum dike on the west coast that was completed Tuesday. (Yonhap News)

Thousands of government officials, lawmakers and diplomats, including President Lee Myung-bak, attended the completion ceremony. The seawall was open to the public shortly afterward. 
The 33.9-kilometer seawall is the first part of the state project which aims to transform the Saemangeum tidal flat, located 280 kilometers south of Seoul, into a large cluster of industrial parks, tourism and leisure facilities, farmland, research centers and international business zones by 2020.
“If the government’s four-river restoration project is a way to give new life to the destroyed rivers, the Saemangeum project is the country’s first comprehensive plan to build a green city,” President Lee Myung-bak said in his congratulatory speech.

Samsung posts record profit

Samsung Electronics Co., the biggest Asian maker of semiconductors, flat screens and mobile phones, reported record profit after rebounding demand for personal computers drove up chip prices.

Bloomberg Photo

First-quarter net income rose almost seven-fold to 3.99 trillion won ($3.6 billion) in the three months ended March 31, from 582.2 billion won a year earlier, the Suwon, South Korea- based company said in a statement today. Sales, including those of overseas affiliates, increased 21 percent to 34.64 trillion won.

Samsung said it expects to boost spending and earnings growth to extend into this quarter, joining technology companies including Intel Corp. and Apple Inc. in signaling a revival in demand for electronics ranging from televisions to PCs. 

Analysts predict Samsung's earnings growth will probably extend until the third quarter, while higher memory-chip and flat-panel prices will help the company post record profit this year.

The likelihood of increased spending "reflects a confidence in demand," said Chang In Whan, president of Seoul- based KTB Asset Management Co., which manages the equivalent to $10 billion in assets. "I think overall the company will post stronger earnings than we previously anticipated.?"

Samsung, which climbed 77 percent last year, rose 1.6 percent to 838,000 won at 10:58 a.m. in Seoul trading, while the benchmark Kospi index gained 0.8 percent. The shares have climbed 4.9 percent this year, compared with the 3.6 percent advance by the Kospi. (Bloomberg)

[G20 SUMMIT AGENDA (1)] What is driving global imbalances?

[G20 SUMMIT AGENDA (1)] What is driving global imbalances?

The following is the first in a series of articles analyzing the major problems that the G20 leaders should tackle to stabilize the global financial markets and rebalance the world economy. -- Ed. By Ryou Jai-won Balance means a state of equilibrium in which there is no tendency to have a fall. While something in balance looks good, something out of balance gives us a feeling of anxiety and tension. The balance between debits and credits is no exception. That is why global imbalances, i.e., surplus or deficit in international transactions among major countries, particularly in trade of goods and services, may well cause instability in the global economy. The protagonist in the drama of global imbalances is the United States. The U.S. current account deficit has continued to deteriorate since the early 1990s, amounting to 6 percent of gross domestic product in 2006. Given the U.S. role as the spender and borrower of last resort in the global economy, it is no wonder that the U.S. current account deficit is a mirror image of the global imbalances. The antagonists include China, the world`s manufacturing powerhouse, and a group of oil exporting countries in the Middle East. Because Europe`s current account is almost balanced as a whole, the adjustment of the U.S. current account cannot be considered separately from a reduction in the surpluses of emerging East Asian and Middle Eastern economies. There have been vigorous discussions on the sustainability of global imbalances. Pessimists like Paul Krugman, who won the Nobel Prize in 2008, warned that the U.S. current account deficit could not be sustained forever and that an abrupt adjustment process beginning with a dollar crisis would jeopardize international financial stability and stable economic growth. On the other hand, optimists like Richard Cooper at Harvard University insisted that excess saving (reflecting demographic change) in Europe and East Asia would be invested in the United States, financing the current account deficit in the foreseeable future. In the middle of the global financial crisis, the problem of global imbalances seems to have been resolved to some extent. However, it remains to be seen what happens to those imbalances once the global economy bounces up. According the IMF`s prediction, global imbalances will linger well after recovery. The issue of regaining global balance is expected to be the focus of hot debates at the coming G20 summit meeting in Seoul, particularly between China and the United States. Surprisingly enough, there are many Western economists who blame the East Asian countries for the U.S. current deficit. It was Ben Bernanke, professor of economics at Princeton University and the current chairman of the U.S. Federal Reserve, who popularized the global savings glut hypothesis. In his famous Homer Jones Lecture in 2004, he claimed that a significant increase in the global supply of saving was responsible for both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates in the world. In the same context, Martin Wolf, the renowned columnist of the Financial Times, insisted that the inability or unwillingness of East Asian and Middle East economies to absorb surplus savings made the United States a superpower of global borrowing. In his 2009 bestseller, Fixing Global Finance, he went further to conclude that global imbalances led to the U.S. subprime crisis and eventually the global financial crisis. Should balancing in the U.S. current account come at the cost of surplus in the East Asian countries? Do Asian countries need to replace the United States as a driver of global growth by giving up their export-oriented growth strategy and relying more on domestic spending? Will the U.S. dollar substantially depreciate in the process of correcting global imbalances? In order to answer these questions, we should examine first what caused the global imbalances, asking how extensive national savings and the current account surplus in East Asia are linked to the global imbalances. Stylized facts about the U.S. current account deficit In retrospect, running a current account deficit has been a chronic phenomenon for the United States. As shown in Figure 1, the deficit amounted to 3 percent of GDP in the mid-1980s. To help facilitate the U.S. adjustment of the significant external imbalance, the Group of Five countries (France, Germany, Japan, the U.S. and the U.K.) agreed to depreciate the U.S. dollar with respect to the Japanese yen and the German mark. As a result of coordinated intervention and associated policy changes that followed the so-called Plaza Agreement of September 1985, the value of the U.S. dollar against the yen declined by 35 percent through August 1986. Thanks to the depreciation of the dollar, the U.S. current account balance began to improve and turned to a surplus in 1991. But it was only a year later that it began to worsen again. The size of current account deficit continued to grow, reaching 6 percent of GDP in 2006. Since 2007, the current account deficit began to shrink and recorded 3 percent of GDP in 2009. However, it remains questionable whether the deficit will continue to narrow to a more manageable level. Figure 1-The U.S. current and capital account balances Note: CABY=current account balance/GDP(%) KABY=capital account balance/GDP(%) Source: IMF, International Financial Statistics, CD-ROM, 2009. Many believe that the effect of strong dollar is indispensable to explaining global imbalances. Figure 2 shows the effective exchange rate of the U.S. dollar. Effective exchange rate refers to the weighted average of a country`s currency relative to currencies of major countries. An increase in the value means an appreciation of the dollar. Both the nominal and real values (adjusted for the effects of inflation) of the U.S. dollar peaked in 1985 and began to fall after the Plaza Agreement. However, the value of the U.S. dollar began to appreciate in 1995, before starting to depreciate again in 2003. The depreciation of the U.S. dollar discontinued because of the global financial crisis. As the immediate impact of the crisis dissipated, the value of the dollar resumed its declining trend.


Figure 2 - Nominal and real effective exchange rates of the U.S. dollar Note: NOMMAJOR=Nominal Major Currencies Dollar Index REALMAJOR=Price adjusted Major Currencies Dollar Index Source: Federal Reserve Board (www.federalreserve.org) Compared with the trend in the current account balance, the U.S. dollar exchange rate fluctuations do not appear to be simple. According to national income accounting, a current account deficit is an outcome of insufficient private savings relative to investments or government deficits, irrespective of the level of the exchange rate. Due to bubbles in equity and real estate markets, domestic investment in the United States was active, recording 17.1 percent of GDP in the fourth quarter of 2008. Moreover, private consumption has remained strong at around 70 percent of GDP since 2001. In contrast, the U.S. personal savings rate continued to decrease since the mid-1980s, amounting to 1.2 percent in the first quarter of 2008. In addition, the fiscal balance (taxes minus expenditures) has been recording a deficit except for the short period between 1997 and 2001, substantially worsening after the Iraq war. To sum up, the U.S. current account reflects structural factors concerning consumption-saving behavior both in private and public sectors. Testing the global savings glut hypothesis Then, what is the role of the global savings glut in global imbalances? Capital flows from surplus countries to the United States became evident after the currency crises in East Asia in 1997, followed by similar crises in Russia and Brazil in 1998. With an increase in investor preference for safer assets, which the United States offered, the U.S. interest rates began to fall in the early 2000s, while capital inflows to the United States picked up. As a result, the U.S. dollar substantially appreciated despite the worsening U.S. current account deficit. Moreover, the insufficient U.S. national savings could be compensated by high savings on the part of the U.S. trading partners. That is why many pointed out savings glut of some East Asian countries as the major cause of the U.S. current account deficit. However, the causality between the two is not clear. Moreover, this criticism does not answer the related question: Why do these emerging market economies try to accumulate foreign reserves denominated in the U.S. dollar? In order to evaluate the validity of the global savings glut hypothesis, it is necessary to figure out the relative importance of domestic factors such as fiscal deficits or over-consumption and external factors such as East Asia`s savings. To do this, I have set up a simple model based on the modern portfolio balance approach explaining the dynamics of exchange rate movements in the process of interaction with capital and current accounts. It consists of U.S. variables (real GDP, interest rate, current account balance, capital account balance, nominal exchange rate and national savings), along with the savings of East Asian countries (China, Japan and Korea). The sample period is set to the first quarter of 1991 and the fourth quarter of 2007. Due to rapid progress in computing technology, it is not difficult to analyze the relationships between these variables with a personal computer. However, it is important to remember that empirical findings are not immune from many annoying problems including the specifications of the model, definition of the variables and sample periods of analysis. Despite these shortcomings, my empirical analysis shows that the U.S. current account deficit maintained since the early 1990s is mainly driven by the domestic factors such as a decrease in the U.S. national savings and an increase in money supply growth. Contrary to the global savings glut hypothesis, the East Asian national savings do not appear to produce a significant effect on the U.S. current account deficit. If we use the East Asian exports instead of East Asian national savings, the result is not much different. Therefore, it appears too farfetched to insist that too much saving in East Asia and the resulting increase in net exports are the main cause of the U.S. current account deficit. On the other hand, an increase in the U.S. money supply growth produces a significant effect on the U.S. current account deficit. This finding seems to support the view that a lax monetary policy pursued since 2001 has aggravated the current account deficit. Another interesting result is that the U.S. current account was not very sensitive to changes in the exchange rate. This finding implies that correcting the global imbalances by means of depreciating the U.S. dollar alone is hardly possible unless changes are also made in structural and other macroeconomic factors. Despite the growing interest in exit strategies, it will not be easy to stop expansionary aggregate demand policy. Therefore, a successful resolution of the global imbalances seems hardly plausible in the foreseeable future. Epilogue Global imbalances have many important implications. Here I would like to discuss the confidence problem of the dollar within the context of global imbalances. To be specific, there are two critical questions: (i) the possibility of a free falling dollar and (ii) the feasibility of achieving global balances in a more orderly manner. First, when and how much the dollar will eventually depreciate depends on the strength of the confidence international investors have in the dollar as the key reserve currency. Before the crisis, many had suggested that the dollar would not depreciate because official capital outflows from Asian emerging market countries would continue as they have accumulated reserve asset claims on the center country. However, Professor Barry Eichengreen at the University of California at Berkeley warned that the U.S. current account deficit would cause the dollar to depreciate against major currencies. The recent exchange rate movements support the view that the dollar may well depreciate substantially in the long run. Regarding the second issue, we know the answer better. In order to resolve global imbalances, the U.S. should increase its savings rate, reduce fiscal deficit and tighten its money supply. As a means of coping with the global imbalances, the East Asian countries, particularly China, are often asked to spend more and save less. It is true that global rebalancing of demand is needed in order to restore sustained growth of the global economy and an increase in the domestic demand in the surplus countries such as China and Japan may be helpful in rectifying global imbalances. However, it appears to be insufficient per se.

Hyundai wins $160 million power plant in Venezuela

Hyundai wins $160 million power plant in Venezuela

Hyundai Heavy Industries Co., the world’s largest shipyard, announced yesterday that it won a $160 million order for packaged power stations from the government of Venezuela.


A packaged power station is a small power station, the equipment for which is packed into a 40-foot container.

The packaged power stations are powered by Hyundai Heavy Industries’ HiMSEN engine that can run on diesel or on cheaper heavy oil.

The order is for 120 units of packaged power stations, with a combined capacity of 204 megawatts, sufficient to supply electricity to 200,000 households, the company said. Of the 120 units, 64 will be installed in the cities of Guacara and Moron, located in the northern Carabobo state.

The characteristics of its packaged power stations made them the ideal solution for Venezuela’s severe electricity shortages caused by the prolonged drought as the country relies heavily on hydroelectricity for its power supply, the company said.

Aside from Venezuela, more than 820 packaged power stations have been exported to 19 countries including Brazil, Cuba and Iraq, the company said.

The company said that its packaged power stations have proved popular in Middle Eastern and South American nations whose electric grids are prone to damage from natural disasters and conflicts due to their durability, transportability and simple installation.

According to the company, its packaged power stations installed in Chile and Haiti continued to function despite the recent earthquakes.

Asiana resumes flights to Europe

Asiana resumes flights to Europe

Asiana Airlines, the country’s second-largest air carrier, resumed flights to Europe yesterday after most European airspace was reopened, easing five days of flight chaos caused by the volcanic ash cloud pouring out of Iceland.


Asiana resumed operations to Europe starting with a cargo flight leaving for Vienna at 20:15 p.m. The carrier will also restart operations of its passenger flights to Frankfurt and Paris today as aviation authorities cleared the ban on air travel in most of Europe. However, flights to London are still under consideration as the United Kingdom is still affected by volcanic ash, the air carrier said in a statement.

Korean Air, the country’s biggest air carrier, meanwhile, said it was still considering reopening European routes, citing safety concerns.

Earlier in the day, the government, air carriers and exporters held an emergency meeting to minimize loss from the volcanic flight chaos. The Ministry of Land, Transport and Maritime Affairs said it would support air carriers operating special flights to Europe by sending official letters to request countries allow Korean flights to use their airspace, officials said.

Participants included officials from the nation’s two major air carriers, airport operators and major exporters currently having trouble sending products to Europe.

The measures come as many exporters fear that the ongoing disruption may hurt business.

“The meeting was held to reflect ideas from exporters, particularly those in the IT industry, who may suffer huge losses if the disruption continues,” an official at the ministry said.

According to data by the Transport Ministry, 38 passenger flights and 32 cargo flights scheduled to and from Europe have been canceled since Friday. An estimated 2,000 tons of goods to be shipped by air were held up, and 30,000 passengers were stranded, they said.

KT launches online e-book market

KT launches online e-book market
KT Corp., Korea’s No. 1 telecom provider, yesterday launched an e-book service promising to give users access over 100,000 titles on an array of digital gadgets.

The KT QOOK book café service is available through e-book readers, smartphones and personal computers from different manufacturers including Samsung and Apple, Seo Yu-yeol, president of the home customer group at KT, said at a new conference. 　

QOOK is KT’s highly-rated brand which has combined its telephone, internet and broadcast services.

Currently, there are 40,000 digitalized books available online, ranging from academic material, comic books and magazines to audio books and thesis papers. The writers of the books will determine the prices.

The country’s largest fixed-line telecom operator will also permit publishers and writers to sell their work using the system. It plans to release policies on the open market sometime in June.

“We’re also in the process of making the service available for overseas Koreans at this moment for them to easily download the digitalized material,” said Song Young-hee, head of home customer strategy at KT.

The firm plans to establish about 27,000 Wi-Fi zones, called QOOK and SHOW zones, mostly in the metropolitan regions by the first half of this year.

“Going ahead with a new business pushes us to change the trend in the industry … I’m confident that we could induce that change,” said Seo.

Earlier this month, the government announced it would support the digital transition move by devising a roadmap this year on how to develop the rapidly-growing electronic book industry.

Together with the education and culture ministries, the Ministry of Knowledge Economy said they would encourage technological development as they project the digital contents market to grow to $8.9 billion by 2013, a sharp jump from $1.9 billion in 2008.

They also expect the number of mobile devices to increase to 77 million by 2018.

Korean pavilion completed in Shanghai

Korean pavilion completed in Shanghai
Construction of a joint exhibition pavilion for Korean exporters in Shanghai has been completed, a top executive said yesterday in Seoul.

“The construction of the joint exhibition pavilion has been completed and will start its operations from April 20. The pavilion will officially open on May 1,” Oh Young-ho, vice chairman of the Korea International Trade Association, told reporters yesterday.


The upcoming World Expo 2010 offers a chance for Korean companies to showcase their technological advancement and enhance their corporate image for the 70 million visitors expected to attend.


“It will build a foundation for Korean companies to take a step toward Chinese customers and also to strengthen economic ties between Korea and China,” Oh said.


Last year, Korea’s 12 leading exporters broke ground on a joint exhibition pavilion for the expo, in an effort to expand their presence in China. A group of 12 companies, including Samsung Electronics, Kumho Asiana, Shinsegae, POSCO, Hyundai Motors and Korea Electric Power Corp. has participated in the construction of the joint exhibition facility on the 3,000-square-meter property in the Chinese city’s Puxi region. Hyosung, Doosan, LG, STX, Lotte and SK Telecom have also taken part in the project.


Korean businesses have invested about 30 billion won ($27 million) for the construction and operation of the joint exhibition pavilion while KITA, an influential business lobbying group, took charge of overall coordination. The joint pavilion will visualize the future city driven by green technology.


“The pavilion ... will give them a chance to promote their social contribution activities and also visualize green cities of tomorrow pursued by Korean firms,” the vice chairman said.


Businesses will showcase their strategies for making city life better by using renewable energy, smart grid technology and intellectual transportation systems in the future, he added.


The economic growth of China is closely related to the future of the Korean economy. Korea’s trade volume with China may top $200 billion in 2013, according to a recent report. China has been Korea’s largest trading partner since 2004. Exports to China by the 12 companies alone account for 47 percent of their total sales, according to KITA.

Hyundai Heavy, LG may join $1 billion U.S. solar project

Hyundai Heavy, LG may join $1 billion U.S. solar project

Matinee Energy Inc., a U.S. based renewable energy company, said it invited Hyundai Heavy Industries Co. and LG Electronics Inc. to become partners in a $1 billion solar project.



Matinee signed a preliminary agreement with the Korean companies, the solar power projects developer said in a statement on Sunday, without saying where the plant would be built.


Hyundai and LG earlier said they were named preferred bidders for a solar-power order worth $1 billion from Matinee Energy. The order is to build 240 megawatts of capacity, Kim Kwang Kook, a spokesman for Hyundai Heavy, and Lee Jin-se, a spokesman for LG Electronics, said separately by phone.


Hyundai and LG are the latest Korean companies to announce plans for overseas renewable energy markets in a bid to diversify their revenue sources. Samsung C&T Corp., the nation’s second-largest construction company, and ENCO Utility Services of the U.S. plan to build solar-power plants in California. In January, Samsung announced a $6.7 billion wind and solar power project with state-run Korea Electric Power Corp. in Ontario.

Korean economy to grow 5.2%: ADB

Korean economy to grow 5.2%: ADB
Asian Development Bank said yesterday that Korea’s economy will grow 5.2 percent in 2010, as corporate investment and private consumption pick up and exports remain strong.



The Manila-based institution’s projection is more optimistic than that the Korean government’s forecast for 5 percent growth. The Bank of Korea, however, raised its growth outlook to 5.2 percent earlier this month.


Consumer prices will grow around 3 percent year-on-year in 2010 and then will rise to 4.6 percent in 2011, the ADB forecast.


Korea’s economy, the fourth largest in Asia, managed to grow 0.2 percent in 2009, thanks to aggressive stimulus measures and record-low interest rates, while many advanced economies slipped into a recession

U.S. not ready to discuss trade issues in KORUS FTA

U.S. not ready to discuss trade issues in KORUS FTA

The United States is not yet ready to discuss key issues with South Korea that need to be addressed before the two countries ratify their free trade agreement (FTA), a senior U.S. trade official said Monday, according to Yonhap news agency.


The bilateral KORUS FTA was signed in 2007, but still awaits ratification from the legislatures of both countries.

"What we are doing in the United States is a real reviewing of the free trade agreement and looking at areas we have concerns expressed," Wendy Cutler, assistant U.S. trade representative for Japan, Korea and APEC Affairs, told Yonhap News Agency.

"One of the key areas we have concerns expressed with the free trade agreement is the automotive sector," she said.

The imbalance in auto trade and restricted shipments of U.S. beef are key hurdles to the early ratification of the free trade accord, signed in 2007.

Some U.S. officials have said in public they want to address those issues in side agreements to avoid a possible revision of the text of the deal.

Korea to invest W20b in undersea robots

Korea to invest W20b in undersea robots

The government will invest 20 billion won ($18 million) into developing robots for marine exploration until 2015, the Ministry of Land, Transport and Maritime Affairs said yesterday.

The deep sea robot will have advanced sonar equipment and multi-jointed legs. It will be capable of walking at up to 50 centimeters per second and swimming at 30 centimeters per second.

The announcement came after a recent troubled search of a sunken naval ship and its missing crew.

The project will be conducted in two stages until 2015, and the organization that will carry out the project will be selected during May, the ministry said.

In the first stage, scheduled to be conducted from this year until 2012, 9 billion won will be injected into developing a robot capable of operating at depths of up to 200 meters, the ministry said.

The robot developed in the first stage of the project will move by means of multi-jointed legs on the seabed to overcome the fast tidal currents prevalent in Korea’s coastal waters, the ministry said.

It will also be fitted with advanced sonar equipment to allow it to operate in murky waters.

The ministry said that the robot developed for shallow sea operations is scheduled to be deployed in a range of activities such as monitoring underwater environmental conditions, exploring and salvaging sunken ships, in 2013.

The second stage of the project, which will take place from 2013 to 2015, will see an investment of 11 billion won for developing robots for operating at depths of up to 6,000 meters.

Once complete, the deep sea robot will be used to explore underwater volcanoes, undersea hydrothermal vents and other underwater features that are difficult to explore with existing equipment, the ministry said.

According to the ministry’s projections, the local market for such robots between 2016 and 2020 will grow to be worth 150 billion won including maintenance and operation.

STX wins ship orders worth $250m in April

STX Offshore & Shipbuilding Co., the nation‘s fourth-largest shipbuilder, announced yesterday that it won contracts for four ships worth a total of $250 million this month.




STX said that the company closed two deals with a Greek and a Singaporean company, respectively, to build one bulk carrier each. The other two contracts are with an unidentified Asian company to deliver two large-scale special purpose ships.



So far this year, the company said that it has secured contracts for 19 commercial ships worth $710 million

I30 hatchback tows Hyundai Europe sales

More than 500,000 units of Hyundai Motor Co.’s compact hatchback i30 have been sold since its launch in July 2007, the company said on Friday.


The i30 is the company’s first vehicle designed specifically for overseas markets to break cumulative sales figure of 500,000.

The car is designed to target European markets, and is currently being produced in Korea, China and the Czech Republic. Of the about 510,000 units of the vehicle sold worldwide, more than 86 percent were sold outside of Korea.

Hyundai Europe vice president Allan Rushforth said in a statement that the company will keep making improvements to the i30 in order to further increase the vehicle’s sales in the European market.

With the i30, Hyundai appears to have hit the right chord with European motorists.

According to Hyundai, the i30 came out on top in the customer satisfaction survey conducted by the U.K.-based automotive publication Auto Express. The survey asked 23,000 U.K. motorists questions on a number of categories including reliability, quality and fuel economy to rank vehicles.

The i30, the first Korean vehicle to top the list, was followed by the Jaguar XF and the Skoda Octovia in this year’s survey.

Aided by the popularity of the i30 and the other i-series vehicles -- the i10 and i20 – Hyundai’s monthly sales in the United Kingdom rose to a record high of 15,429 units in March, the company said.

In addition to the U.K. market, Hyundai has been performing well in the wider European market so far this year.

According to the European Automobile Manufacturers’ Association, Hyundai’s first quarter sales in the European Union and in the countries belonging to the European Free Trade Association increased by 24.2 percent from the same period last year.

With the increase, the carmaker sold about 100,800 units in that market, raising its market share to 2.7 percent from the 2.4 percent recorded for the same period last year.

Along with Hyundai, its sister carmaker Kia Motors Corp. saw its sales for the first three months of the year increase by a slightly higher rate of 25.9 percent over the same period.

The sales increase rates recorded by Hyundai and Kia are respectively the sixth and the fifth highest they have recorded.

Renault Group’s Dacia brand took the top spot in terms of sales increase rate, 59.1 percent, followed by Land Rover, the first quarter sales of which rose by 42.3 percent from a year earlier.

Doosan Heavy flexes muscle in global atomic power market

Korea stunned the global nuclear power industry when the newcomer to the world market fetched a $20 billion deal to build reactors in the United Arab Emirates late last year.

One of the firms behind the achievement is Doosan Heavy Industries Co., a leader in the technology required to manufacture nuclear reactors and other key equipment.

“We could proudly say Doosan has the global competitiveness in supplying nuclear power facilities since it is among the rare companies to be equipped with the ability to make the material supplies and one that has the technologies,” said company vice president Kim Tae-woo.

Inside of Doosan Heavy Industries Co.’s factory in Changwon, South Gyeongsang Province.
The company aims to win global orders worth $18 billion by 2015 as the demand for atomic power generation is expected to surge as an alternative to fossil fuel based energies.

Doosan is already a global leading player in power generation and desalination facilities.

The company claims to be one of the few firms across the world that has an integrated productivity system which could control all execution stages from material selection to final product development.

In the past two decades it has supplied about 20 nuclear reactors in Korea. It has also provided nuclear power facilities for 12 different nuclear plants in the United States, China and Japan from 1997-2008.

According to the World Nuclear Association, some 430 more nuclear reactors are projected to be built by 2030. Currently, about 430 nuclear reactors are in operation in 31 countries.

A nuclear reactor produced by Doosan Doosan Heavy Industries Co.

Doosan said the firm expects the additional nuclear reactors to create a $1.08 trillion market in the next 20 years.
“Although many nuclear power facility manufacturing companies have experienced downturns due to the sluggish market which has continued for the past three decades, Doosan has accumulated its technology and experience by continuously building domestic nuclear power plants,” Kim said.
The country’s mid-sized conglomerate focusing on heavy equipment was part of a consortium led by Korea Electric Power Corp. which signed a $20 billion deal to construct four 1.4 million-kilowatt nuclear power reactors in the United Arab Emirates by 2020.
Seoul officials project the deal to generate an additional $20 billion contract for operation and maintenance for 60 years.
The government estimates that the contract will create direct exports amounting to $20 billion -- equivalent to a 1 million-unit shipment of Hyundai NF Sonata sedans -- and that the deal will offer 110,000 new jobs.
Korea is a relative newcomer to the international nuclear market; however, it is recognized for its cost-effectiveness, safety, technological know-how and quick construction.
The country also has the world’s sixth largest atomic generation capacity. It stood at 93.3 percent as of 2008, 14 percentage point higher than the global average of 79.4 percent.

Park Gee-won, president of Doosan Heavy, has previously said that the firm aims to win $18 billion worth of global orders and reach sales of 17 trillion won with an operating profit margin of 10 percent by 2015.
Doosan has also built and delivered a nuclear reactor to a power plant in China for the first time in February last year, marking its first sale of a nuclear reactor overseas.
Since then, the company has won a $240 million deal last September to supply power plant equipment to Saudi Arabia and a landmark nuclear deal in UAE late last year to build the nuclear power plants within the next 10 years.
The firm then moved on to sign a $350 million deal to provide equipment for a power facility in Egypt in February and won a $120 million power plant order in New Caledonia.
Being the only company in Korea which specializes in power plants, it also focuses on making conventional power plants more environmentally friendly.
It is directing the development of a next-generation power plant technology called the Integrated Gasification Combined Cycle -- creating gas from coal.

Doosan officials celebrate the completion of new nuclear reactor equipment.
As part of the effort, Doosan Heavy’s subsidiary Doosan Babcock is taking charge of a government-funded project called OxyCoal U.K. in the United Kingdom to develop competitive oxyfuel technology suitable for full-scale plant applications.
Another deal with Korea South East Power Co. asks Doosan to design and install a fuel-saving boiler facility at the power plant in Yeosu, South Jeolla Province, by 2011.
The firm is also in the process of making fuel cells, a type called the molten carbonate fuel cell, which has the capacity of producing electricity for 200 households. It aims to commercialize it by 2012.
Proving to be an outcome of the company’s ongoing efforts, it has been ranked fourth on the list of world’s top 40 firms in 2009, according to A.T. Kearney’s 2009 Global Champions Report, released by Business Week magazine.
Doosan was noted for its foresight and agility in buying new technologies and for maintaining a consistent corporate culture that focuses on high performance.

Moody’s upgrades Korea rating to A1

Moody’s upgrades Korea rating to A1

Moody’s Investors Service has changed Korea’s government bond ratings to A1 from A2 in three years, citing the Korean economy’s “exceptional” resilience to the global crisis.

The ratings agency maintained the outlook for Korea at “stable.”

“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Moody’s senior vice president Tom Byrne said in an e-mailed statement.

The ratings agency said the Asia’s fourth-largest economy was responding quickly to the improving global economic environment.

The government’s supportive policy measures also helped sustain economic growth, Moody’s said.

“The resiliency of Korea’s economy was evident in its ability to withstand relatively well the concretionary forces which emanated from the global recession,” Byrne said.

Before the announcement from Moody’s today, some observers had expected that Moody’s would maintain Korea’s credit rating at A2 due to lingering concerns over the large proportion of short-term external debts in the banking sector.

However, Moody’s said the vulnerabilities coming from the banking industry’s reliance on external debts are “being addressed and reduced.”

Despite the upgrade, Byrne said that the eventual exit from the accommodative monetary policy by the Bank of Korea could slow growth momentum in the next one or two years.

The ratings agency also warned that Korea will face demographic challenges in the next 10-15 years.

It pointed out two major risks that could affect future ratings – one, the snowballing public-sector debt and the other, the risk posed by North Korea.

However, concerns over possibilities of military provocations can be counterbalanced by “South Korea’s robust alliance with the United States and shared interests among regional powers for stability on the peninsula,” it said.

The Korean economy averted a recession and pulled off the 0.2 percent growth in 2009, while most of the global regions were suffering from a recession.

The central bank recently revised the 2010 growth forecast for Korea to 5.2 percent from a previous 4.6 percent, citing robust exports and improving domestic demand.

Korean stocks sharply rose after Moody’s upgraded the country’s bond ratings to A1 and maintained a stable outlook.

Bodies of missing sailors seen in sunken warship(천안함)

Bodies of missing sailors seen in sunken warship(천안함)

Salvage workers saw several bodies inside a sunken naval ship on Thursday when they entered the stern of the 1,200-ton Cheonan corvette to install water pumps after a crane raised it from the sea.

It is believed that many of the vessel's 44 missing crew members have been trapped inside since it sank last month near the North Korean border.

South Korea began lifting the vessel on Thursday in waters near the tense border with North Korea, about three weeks after the ship went down following a mysterious explosion on board, according to AP.

Efforts to locate the 44 missing crew and salvage the wreckage of the 1,200-ton Cheonan has been impeded by high winds, a swift current and other bad weather conditions, the report said.

The Joint Chiefs of Staff said a huge naval recovery-crane started hoisting the stern, where most of the missing sailors are believed trapped. Footage by SBS television showed the stern's upper part appearing on the sea surface, workers taking on the deck and using hoses to pull water out of it and lighten the weight.

The report said fully retrieving the stern, moving it onto a barge and searching for the missing crew are expected to take 11 hours. The stern is to be moved to a naval base to investigate the cause of the explosion while the rest of the ship is to be salvaged as early as next week, AP quoted JCS officials as saying.

Fifty-eight crew members were rescued shortly after the Cheonan split into two after exploding March 26 during a routine patrol. Divers have recovered two bodies.

No cause has been determined. There has been some suspicion but no confirmation of North Korean involvement in the sinking, which occurred near the two Koreas' disputed western sea border -- a scene of three bloody inter-Korean naval battles, the report said.

Doosan Uses Global Crisis as Chance to Get Ahead

The global economy is struggling, with Korea Inc. not exempt from its effects.


Korean firms are doing what they can to keep afloat but Doosan Group is trying to get ahead of the pack.

The conglomerate, focused on heavy industry, has preemptively been engaged in boosting its liquidity even before the full brunt of the global economic meltdown came Korea's way.

After initial difficulty that in the summer months forced the group to pump $1 billion into units which last year borrowed heavily to take over companies of U.S.-based Ingersoll Rand, it appears to be standing on firmer ground.

"It is highly unlikely Doosan Group will see a serious liquidity problem," research firm UBS said in a memo to clients. Shares of Doosan Group rose 3.65 percent to end 70,900 won on Korea's main bourse, last week.

Liquidity Is Everything

Big corporations are trying to secure liquidity, seeing tougher times ahead.

Doosan's efforts to lower debts and boost liquidity have been well under way.

A month ago, Doosan said it will sell 100 percent of its packaging business unit to a private equity fund, MBK Partners, for 400 billion won by the end of this year, to solidify its financial structure.


Doosan said it will be able to settle 199.2 billion won in debt and secure 200.8 billion won in cash from the deal to sell Techpack ― Korea's No. 1 packaging company by market share.

"We are still positive about Doosan Group. It has already sold its packaging unit and is forecast to continue restructuring efforts to lower leverage by selling non-core assets," Citi Group said in a research finding.

"Yes, we are positive about the decision. Doosan's debt ratio will lower to 46 percent, while its net borrowings are expected to decrease 482.4 billion won from 882.4 billion won," Hyundai Securities said, adding the brokerage is maintaining a "positive outlook" for the group.

As another "consistent" move for a better corporate financial structure, Doosan now plans to separate its defense business operations and make them an independent entity by the end of 2008.

Doosan officials say the "Doosan DST," which will have an initial capital of 396.9 billion won with debts of 146.3 billion won, will only focus on the defense sector, to manufacture armored vehicles and other weapons systems.

But industry officials and even Doosan insiders say the very recent decision is a pre-emptive measure for the group to spur its ongoing restructuring efforts for more cash.

"As far as I know, Doosan Infracore ― the group's heavy equipment unit ― will completely drop the defense business within the first half of next year. Doosan will secure a maximum of 600 billion won by selling the defense unit," a high-ranking industry source told The Korea Times.

"Deciding to sell a business unit can be one of the hardest decisions chief executives have to make. Some cannot bring themselves to wield the axe. But a growing body of evidence suggests that smart sellers can earn impressive returns," another industry source said, citing Doosan's Ingersoll timing was good.

Meanwhile, Doosan Infracore is known to have sold 22 percent of its stake in Korea Aerospace Industries and properties in Incheon, Gyeonggi Province for similar purposes. Doosan Engine, an unlisted unit of Doosan Heavy, is reviewing the possibility of selling its 10.15 percent share in STX.

"Our top priority is to strengthen investors' confidence. Some are painting a negative picture of our Bobcat business. But such worries are rather exaggerated," spokesman Shin Dong-gyu said.

Analysts say the restructuring efforts have well echoed previous promises, after the group gave up its bid for a stake in Daewoo Shipbuilding & Marine Engineering.

"Our decision not to bid for Daewoo Shipbuilding has freed us to spend money to improve debt-equity ratios at overseas units," according to Shin.

Hanwha Group, selected as preferred negotiator, which has seen stocks tumble as markets fear that their buyout plan comes at a time when lenders tighten their purse strings, making the firm raise a bigger portion of funding.

But concerns are still high over the future of its Bobcat business.

Analysts say signs of deterioration of machinery demand in the U.S. and Europe and a weakening local currency hit by the global economic slowdown will burden the group and Infracore.

In the third quarter, Doosan Infracore reported a net loss of 43 billion won, as a weaker won inflated its financial burden on overseas debts. In the previous quarter, the company reported a net profit of 47.2 billion won.

Another spokesman Jeong Kyong-O said Korea's won has dropped nearly 30 percent this year against the greenback, inflating the book value of Doosan Infracore's dollar-denominated debt in local currency terms.

"We will push very intensive restructuring measures for our Bobcat business as planned," Jeong said.

According to Doosan officials, the group is pursuing restructuring of more than 70 Bobcat construction vehicle factories around the world to improve labor productivity and cut fixed costs.

Its global restructuring is expected to help raise Bobcat's sales by $110 million to $150 million.

Doosan Holdings Europe and Doosan Infracore International had borrowed $2.9 billion to fund a $4.9 billion purchase last year of Ingersoll Rand's three business units ― Bobcat, Ingersoll Rand Utility Equipment and Ingersoll Rand Attachments.

The deal still is the biggest overseas acquisition by a Korean firm.


Holding Company System

Doosan Group is on the right track to transform to a holding company system ― another key catalyst for Doosan for greater investors' trust.

Doosan officials say dropping its packaging business has also been in line with efforts to transform to a holding company system.

"Investors are also concerned with the group's management structure. We are easing worries over management by departing from the group's control structure, based on a cross-shareholding scheme," Shin said.

Doosan announced a plan for a holding company system in January 2006.

For measures, the group separated its magazine and printing businesses, while it spun off bio-related business in December last year. In November 2006, Doosan dropped its "Kimchi" business.

The cross-shareholding system in South Korea has been accused of being the main means used by "chaebol" owners to exercise control over entire conglomerates despite their small interests.

Under the system, subsidiaries' trouble often has an adverse effect on other subsidiaries and makes them vulnerable to hostile takeovers.

It has also been cited as a major factor for the under-valuation of South Korean companies.

Doosan was fined by the nation's anti-trust watchdog in 2007 as the group's two subsidiaries ― Doosan Industrial Development and Doosan Heavy & Construction ― unfairly supported other units in the group, including the consulting arm Neoplux, by paying higher purchase prices.

The two subsidiaries were also found to have paid interest on loans taken out by other units on behalf of them.

Concentration

As well as restructuring for increased corporate transparency and to soothe investors' worries over the future of the group, Doosan plans to continue its leadership in the construction equipment sector with the biggest research center in Korea.

Last week, Doosan Infracore completed a 13 billion won machine tools research center to secure a bridgehead in the machine tools market when the economy recovers.

It also said it is targeting 2.2 trillion in annual machine tools sales by 2012. Doosan Infracore ― the world's No. 7 construction equipment maker by sales ― expects to achieve this year's machine tools sales target of 1.089 trillion won, up 18 percent from a year ago.

Infracore, which earns more than 40 percent of its total sales in construction equipment, also produces forklifts, excavators, engines and defense products such as armored vehicles and antiaircraft guns.

Doosan Heavy Industries & Construction owns 39 percent of Infracore.

"We are on a bumpy road for the time being. But our shown and ongoing consistencies towards increased transparency and financial structure will finally work," Shin said.

Samsung Card to Launch in Thailand

Samsung is planning to launch a credit card business in Thailand by setting up a joint venture with a local partner.


It is the first time for Samsung Card, a major credit card service provider in Korea, to expand overseas. The move is in line with the initiative from chairman Lee Kun-hee, who wants to make Samsung’s financial arm as global as its electronics business. Lee recently ended his short retirement from the group’s top position and retained his role as chairman of Samsung Electronics, the group’s flagship firm.

Samsung Card CEO, Choi Doh-seok held meetings with executives of the Thai firm, last week in Seoul, about launching the card business in Thailand, an insider said. “Choi and some other high-ranking executives were present. The atmosphere was very positive,” the source said.

The company’s public relations officials said Monday that it is an ongoing project and there is nothing to confirm, yet.

The source didn’t mention the name of the Thai company, but hinted it could be one of Samsung’s existing partners in the country.

Samsung is one of the most powerful global brands in mobile phones, TVs and shipbuilding. But its financial subsidiaries have focused on the domestic market with few branches outside of Korea.

Thailand is a natural choice to become the base camp of Samsung’s global expansion in the finance sector. The country is one of the largest economies in Southeast Asia, and Samsung has a strong brand name there, especially with its electronics and life insurance businesses.

Currently Samsung Life is operating a joint venture with Saha Pathana Inter-Holding, a major business group in Thailand. The Thai insurance business is believed to be a successful case of localization for the Samsung group.

The Thai joint venture will mark an important milestone in Samsung’s globalization efforts. Late last year, chairman Lee was reported to have reprimanded managers at the group’s financial subsidiaries, asking why they were unable to perform like their sister firms in the manufacturing sector on the global stage.

Samsung entered the credit card business in 1988 but it has no presence outside of Korea, except for a liaison office in New York. The firm’s CEO and vice chairman Choi alluded in his annual speech in January that from this year the firm would push for global expansion.

“When the market is saturated and the competition gets fierce, we need to develop new markets and new growth engines for the next five years or ten years to come,” he said.

Choi was formerly the CFO of Samsung Electronics. As one of the core executive members of the entire group, he was transferred to the credit card subsidiary early in 2009.

Samsung Card recorded 2.7 trillion won in revenues last year, down from 2.9 trillion won in 2008. But its net profit more than doubled to 603.8 billion from 257.7 billion

'Samsung not strong enough to ignore Japan'

'Samsung not strong enough to ignore Japan'

Lee Kun-hee, chairman of Samsung Electronics, said yesterday that the Korean electronics giant still has much to learn from its Japanese rivals, despite the waning influence of the island’s industrial icons, such as Sony and Toyota -- which were once role models for Koreans firms.


Samsung, once an also-ran to Japanese electronics manufacturers, has overtaken its Japanese rivals in the TV and handset markets for the past few years, and further widened the gap during the latest global economic downturn.

“Samsung has been improving for the past several years, but it has a lot to learn from Japanese companies,” Lee was quoted as saying in a meeting with Hiromasa Yonekura, new chairman of the Japan Business Federation, on Tuesday. Hiromasa, president of Sumitomo Chemical Co., visited Seongjiwon, Lee’s private office at his home in Hannamdong, central Seoul.

He also voiced the need for cooperation between Korea, Japan and China, citing their strength in manufacturing and growth potential.

“I think there are a lot of areas where Korean and Japanese firms can cooperate,” he said.

The private sector needs to take the lead (in the cooperation of the three Northeast Asian countries),” he said.
This is his first official activity since he returned to the helm of Samsung Electronics, the flagship unit of Korea’s top conglomerate Samsung Group, on March 24. He left for Europe yesterday to campaign for Korea’s bid to host the 2014 Winter Olympics in its eastern city of PyeonChang. Lee, a member of the International Olympics Committee, plans to meet other IOC members in Switzerland and Italy, and plans to come back to Korea around the end of April.

Lee received a suspended jail term and a fine of 110 billion won ($98 million) for breach of trust in August. The government granted a special presidential amnesty, saying it hopes Lee would rally support for PyeongChang’s third bid to host the Winter Olympics.

Lee subsequently came back to Samsung Electronics, citing the crisis facing the Korean electronics giant. The massive recalls of Toyota have been a wake-up call for Lee, accelerating his return to Samsung’s top job, a Samsung Group spokesperson said.

The massive recalls of Toyota cars have spurred Samsung Electronics and other affiliates of Samsung Group to examine their global operations to see whether a quality management system is in place, the Samsung spokesperson said.

Chung Ki-yong, president of Samsung Economic Research Institute, also yesterday gave a presentation on “lessons learned from the Toyota crisis, in a weekly meeting of chief executives of Samsung Group affiliates.

One of the major factors for Toyota’s problems is its overseas production. Recognizing this, Samsung Electronics said it has maintained the quality of its handsets made overseas similar to those in Korea, and the company is trying to secure ‘absolute quality’ in areas regarding handset safety.

Some Samsung affiliates have a system in place to enable them to check defects in products made globally in real-time, the spokesperson said

POSCO tops steel industry review

POSCO tops steel industry review

The steelmaker POSCO announced yesterday that it was named the world’s most competitive steelmaker by the leading steel industry analysis organization World Steel Dynamics.


POSCO, the world’s fourth largest steelmaker, said that the World Steel Dynamics’s analysis of 23 categories including technological capabilities and profitability showed the company to be the most competitive among the 32 steelmakers included in the review.

POSCO had maintained the top spot in the review from 2002 until 2004, but has been kept off the spot by Indian and Russian steelmakers until this year.

Samsung 3-D TV sales top 10,000

Samsung 3-D TV sales top 10,000

Samsung Electronics, the world’s top TV maker, said yesterday that it sold more than 10,000 units of its full HD 3-D LED TV in Korea, six weeks after its launch.


Sales of Samsung’s LED TVs reached 8,200 units for the first six weeks of the launch last year.

Samsung cited its technology of converting 2-D content to 3-D as one of the major reasons for the popularity of its 3-D TV models

Hyundai Steel vies for position with new steelworks

Hyundai Steel vies for position with new steelworks

Hyundai Steel, the nation’s second-biggest steelmaker, launched a new integrated steelworks powered by eco-friendly technologies yesterday to meet growing demand for automobiles and construction.


The Hyundai Kia Automotive Group affiliate began work on the 6.23 trillion won ($5.54 billion) plant in Dangjin South Chungcheong Province in October 2006. A blast furnace, the first of the two planned for the plant, was fired up in January.

"Today we are at the site of the new beginning of Korea’s steel industry,” President Lee Myung-bak said at the event.

“Due to the unprecedented financial crisis, many companies held back investment, but Hyundai Steel went ahead with daring investment plans, making today possible.”

The president was among the 2,500 government and industry leaders including Roger Agnelli, chief executive of the Brazilian mining firm Vale, and Alberto Calderon, chief commercial officer of the Australian mining firm BHP Billiton attending the ceremony.

“The Dangjin integrated steelworks was built with the aim of becoming a ‘green steelworks’ equipped with world class eco-friendly facilities and technologies,” Hyundai Kia Automotive Group chairman Chung Mong-koo said at the ceremony.

The Dangjin plant is the world’s first to be equipped with enclosed storage for raw materials to prevent the spread of dust, which is one of the more problematic pollutants associated with steel mills, according to the company.

“With the completion of the plant, Hyundai Kia Automotive Group is able to complete the world’s first ‘resource circulating business structure’ that goes from molten iron to automobiles.”

Under the resource circulating business structure, steel produced at the Dangjin plant will be processed by Hyundai Hysco into cold-rolled products, which will then be used in Hyundai Motor Co. and Kia Motors Corp.’s vehicles.

The steel from scrapped vehicles will then be melted down at Hyundai Steel’s electric blast furnace and used to produce construction materials, which will be used by the group’s construction firm Amco.

The plant currently has an annual production capacity of 4 million metric tons, but the figure will be raised to 8 million tons following the completion of the second blast furnace in November. In addition, the company plans to add another 4 million ton capacity blast furnace to the Dangjin facility at a later date.

Pilot operations of the second blast furnace are scheduled for the final two months of the year, and full operation is set to begin in January 2011.

“Of the 8 million ton output, 6.5 million tons will be used for hot rolling with automobile plates being the main product. The rest will be used to produce thick plates, mainly ship plates,” executive vice president Oh Myung-suk said.

“We have completed developing 104 of the 120 hot-rolled products we plan to develop by 2012. The company will also develop exterior automobile plates by the end of the year.”

He added that the company currently has a 400-person research and development team including personnel from the group’s carmakers, and that the steelmaker is planning to expand research facilities.

The new plant also significantly increases Hyundai Steel’s production capacity, making it one of the world’s top 15 steelmakers in terms of production.

According to the World Steel Association, Hyundai Steel was the world’s 30th largest steelmaker in 2008 with an annual output of 9.9 million metric tons in that year.

Including the company’s 11.5 million ton production capacity from electric blast furnaces, the addition of the second blast furnace will push up Hyundai Steel’s annual production capacity to 19.5 million tons.

“The company is changing from a down stream process to an up stream process. The significant thing is that the company’s profit structure is changing,” said SK Securities Co. analyst Lee Won-jae.

“As you move up stream, the profit margin increases. An electric blast furnace provides between 5 percent and 10 percent profit margin, but what POSCO is doing allows 15 percent to 20 percent profit margins when conditions are good.”

However, Lee said that moving upstream in the steel industry is not without its risks.

“There are some investors who think that the new plant is risky because it is a venture into a new area and the market is concerned about raw material prices.” he said.

“For about 40 years, steel raw material prices were set annually, but now they will be decided in quarters. POSCO is likely to raise prices soon, but the concerns are whether the increase in costs can be reflected sufficiently in product prices and for Hyundai Steel the worries are amplified as the company is new to the market.”