The Korean steelmaker is hoping a visit to New Delhi by South Korean President Lee Myung Bak can clear the way for its $19 billion in proposed India investments Posco has been one sharp steelmaker. The company, based in Pohang on the Korean peninsula’s southeastern tip, has long been a symbol that South Korea’s old economy can still be innovative and profitable. After all, it is the one Korean company singled out by Warren Buffett as an investment target. His Berkshire Hathaway owns 4.5% of Posco, according to data compiled by Bloomberg.
Then why is Posco (PKX) so high on South Korean President Lee Myung Bak’s to-do list during his state visit to India this week? The company has ambitious expansion plans in India, hoping to invest some $19 billion in the country. For instance, five years ago Posco unveiled plans to build India’s largest steel mill in the city of Orissa on the Bay of Bengal. Because of local opposition, though, the $12 billion project has suffered extensive delays and Posco hasn’t even secured a 4,000-acre property promised for the steel plant.
Lee wants to enlist Prime Minister Manmohan Singh’s support in clearing the way for Posco to proceed with its Indian investments. For Lee, a breakthrough in India will give him a major political weapon ahead of local elections in June. Lee, a business icon of South Korea’s growth-at-all-costs era in the 1970s and ’80s, has pledged to lay the foundation during his five-year term till 2013 to lift the economy into the world’s top seven, from the current No. 13. He also has promised to double per-capita income to $40,000 by 2017. A major presence by Korean companies in India, the world’s second most-populous market, would help Lee find new avenues of growth for his nation.
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