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POSCO has signed a MoU with the Bank of Development and Foreign Economic Affairs in Russia for the operations of Amurmetal, a scrap based steelmaker in Khabarovsk, in Far East Russia

The state run Russian bank owns a 100 percent stake in Amurmetal. It took over the heavily indebted steelmaker in 2010 from its owner, State Duma deputy Alexander Shishkin. Since the acquisition, Amurmetal’s new owner, which has no experience in the steel business, has looked for a partner at home and abroad to operate and stabilize the faltering Amurmetal.

POSCO said “Under the strategic partnership betweenPOSCO and the Russian bank, aimed at restoring the ailing Russian steelmaker, POSCO will be responsible for operations of the Russian steel mill, while the owner leads management decision making processes. POSCO will get commission in return for the operations of Amurmetal.”

When the two sides sign the main contract after fine-tuning the details for a month, POSCO will dispatch its skilled workforce to Amurmetal and control the production, sales and technology.

POSCO will operate the Russian steel mill for two years as a pilot project, after which the two partner firms will decide whether to extend the contract for five years based on performance, the company said in the press release.