POSCO taps ex-President Chang In-hwa as its next group chairman

POSCO Holdings Inc., the parent of South Korea’s largest steelmaker POSCO, has nominated former President Chang In-hwa as its next group chairman and chief executive officer.

On Friday, the holding firm’s board of directors said that Chang has been chosen from a list of six candidates as the conglomerate’s next leader.

The new chairman, whose three-year term is subject to approval at the steelmaker’s annual general meeting scheduled for March 21, aims to lead the conglomerate, with annual sales of 77 trillion won ($58 billion), out of the industry doldrums amid tough economic conditions.

He will replace the incumbent Choi Jeong-woo whose second term as POSCO Group chairman ends in March.

The 69-year-old nominee, currently a POSCO advisor, has been with the steelmaker for 36 years, joining the company in 1988 as a researcher at the Research Institute of Industrial Science & Technology (RIST) under the company-sponsored advanced research college, Pohang University of Science and Technology (POSTECH).

After graduating from the prestigious Kyunggi High School and majoring in shipbuilding engineering at Seoul National University, Chang received a doctorate from the Massachusetts Institute of Technology (MIT).

At POSCO Group, he mainly worked in the research and development divisions, including his role as the head of the POSCO E&C research team, senior RIST researcher, POSCO technology investment chief and president of POSCO.

Analysts said some of his immediate tasks include strengthening POSCO’s competitiveness in the global steel industry and at the same time nurturing new growth businesses such as battery materials.

STEEL, THE ESSENCE OF POSCO BUSINESS

POSCO, Korea’s fifth-largest business conglomerate, faces growing competition with its rivals in China and Japan, which are also advancing into the Korean market.

POSCO and other Korean steelmakers are reeling from heavy inflows of steel products from China and Japan, which are also struggling to cope with rising inventories amid weak demand at home.

Under pressure from increased imports of cheap Chinese and high-quality Japanese steel products, Korean steelmakers are considering filing an anti-dumping complaint with the Korean government against their rivals in the two neighboring countries, sources said.

The operating profit of POSCO's steelmaking unit accounts for 60% of the group’s entire annual profits.

“Steel is the essence of the POSCO Group. That’s the area of business we must focus on,” Chang told The Korea Economic Daily recently. “Rather than concentrating on new businesses such as batteries, we must strike a balance.”

His appointment comes as steelmakers are required to meet strict environmental regulations such as the planned 2026 implementation of the Carbon Border Adjustment Mechanism (CMAM), a carbon tariff on carbon-intensive products, such as steel, cement and some electricity, imported to the European Union.

POSCO’s battery materials affiliate, POSCO Future M Co., is also struggling with a deepening economic slowdown, particularly in the battery and electric vehicle businesses.

POSCO Future M’s 2023 operating profit was 36.9 billion won, down 78.4% from 165.9 billion won a year earlier.

CONTROVERSY OVER CEO SELECTION PROCESS

Chang’s nomination comes as the steelmaker is engulfed in a controversy over the fairness of its CEO selection process.

POSCO Holdings has come under fire for its opaqueness in choosing a new leader as its largest shareholder suspects that the current selection process is skewed in favor of the incumbent Chairman Choi Jeong-woo. 

In December, Kim Tae-hyun, chairman and chief executive of the state-run National Pension Service (NPS), called for a new process that ensures transparency and fairness in the selection of POSCO’s next CEO.

The NPS is the largest shareholder of POSCO Holdings with a 6.71% stake.

Six of the seven members of the CEO candidate recommendation panel were appointed by the incumbent Chairman Choi, the NPS chief said, indicating that they would likely back Choi again for the role. Under pressure, Choi later said he would not run for a third term.

Choi and seven outside directors of POSCO are currently under investigation by police and prosecutors over alleged embezzlement and anti-graft law violations.

They are accused of unauthorized expenses surrounding its board meeting abroad. The board held a meeting in Canada last August for which the company spent 680 million won on chartered flights, meals, accommodation, golf and other activities.

Police and prosecutors are also looking into allegations that the steelmaker bought a luxury condo in Korea in 2018 that the POSCO chairman and senior executives used for personal purposes.

Write to Hyung-Kyu Kim and Sang Hoon Sung at khk@hankyung.com


In-Soo Nam edited this article.