Nissan Motor said on Thursday it and POSCO will jointly set up a steel sheet processing centre near Tokyo to secure stable supply of cost-competitive South Korean-made sheet steel
and other products.
In early 2005, Nissan, Japan's third-biggest automaker, had been forced to suspend some vehicle production in Japan due to a lack of steel, and had sought emergency supply from POSCO .
The stronger link with POSCO is also seen bolstering Nissan's bargaining power with Japanese steel giants, like Nippon Steel and JFE Holdings, amid rising steel prices.
"We hope to see a stable supply of steel products (through the joint venture)," a Nissan spokeswoman said. "We expect the new company will also increase our procurements from POSCO,"
Nissan said it and POSCO will set up the coil centre in Kawasaki, near Tokyo through an existing joint venture. The company was formed last September between wholly owned unit Nissan Trading and POSCO's Japanese subsidiary with the aim of securing steel product supply.
The timing and scale of the plant were undecided, the spokeswoman said.
The Nikkei business daily reported on Thursday the planned processing facility, whose construction is scheduled to begin this year, will have an annual capacity of 120,000 tons and open in May 2008.
The plant, owned 70% by POSCO and the rest by Nissan, will handle automotive and stainless steel sheet as well as general sheet products for Nissan and other customers, it said.
POSCO, the world's fourth largest steelmaker, has two processing facilities in Japan, and the new one would be the first joint processing Center with an automaker, the Nikkei said.