POSCO announced on July 7th 2008 that the Kwangyang ferronickel refinery, which is constructed as a joint venture between POSCO and SMSP of New Caledonia, is scheduled to operate from September of 2008.

This plant has the capacity to produce 30,000 tonne per annum of nickel in ferronickel and the amount of USD 350 million is invested in this project.

POSCO said that the Company has been granted by New Caledonian Government and Assembly the permission to export nickel ore produced at five nickel mines possessed by SMSP to South Korea for a long period of 30 years. This permission was approved in June of this year.

Following a trial shipment of 5,000 tonnes of nickel ore from New Caledonia effected in late June of 2008, the first lot of 50,000 tonne of nickel ore is due to arrive in South Korea on or about late part of July and, after that, 2,000,000 tonne per annum of nickel ore are scheduled to be shipped from New Caledonia to South Korea.

According to an estimate by POSCO, the project is able to produce ferronickel at a lower cost price than USD 10,000 per tonne of nickel. In view of the countermeasures for environmental pollution, cost of which has increased, other nickel project are supposed to have to pay production cost of USD 13,000 to USD 17,000 per tonne of nickel at present.

POSCO consumes 60,000 tonne per annum of nickel and therefore, the 30,000 tonne per annum of nickel in ferronickel to be produced at the Kwangyang refinery will cover the half of its requirement.