South Korea’s leading steelmakers Hyundai Steel Co. and Dongkuk Steel Mill Co. have embarked on the restructuring process under the so-called One-Shot Act, becoming the latest beneficiaries of the country’s newly-enacted law designed to facilitate and encourage voluntary corporate restructuring.

The Ministry of Trade, Industry and Energy announced Tuesday that it gave the green light to the steelmaking conglomerates’ restructuring plans under the One-Shot Act that will allow the two companies to receive a wide ranging government support including fast-track procedures of mergers and acquisitions, tax benefits and research and development aid for their business reform efforts. The country’s second largest Hyundai Steel plans to address an oversupply of forged steel while No. 3 Dongkuk Steel Mill seeks to ease the oversupply of steel plates.

Hyundai Steel aims to sell off its 500,000-ton-capacity electric furnace in Incheon that produces ingots for forging - basic materials used for shipbuilding and wind power generation - amid sagging demand in the ailing shipbuilding industry. The steelmaker produces about 200,000 tons of forged steel annually, accounting for 7.4 percent of the nation’s total annual production of 2.7 million tons of ingots.

The latest closure follows the firm’s shutdown of an electric furnace with a 400,000 ton production capacity in Incheon last year, said a company official. The steelmaker will integrate its forging business in its Suncheon factory, he added.

Dongkuk Steel Mill on the same day agreed to sell its steel plate plant in Pohang upon the government’s approval. The outlook for steel plates is bleak after the industry is hit by a double whammy of the prolonged slump in the shipbuilding industry and increasing imports of cheap steels from China. The firm already shut down a steel plate plant with an annual capacity of 1.0 million tons in 2012 and another with a capacity of 1.8 million tons in August this year.

As a part of efforts to improve its financial soundness, the steelmaker sold “Ferrum Vill” in Dangjin, South Chungcheong Province, which it built for welfare of its employees, at 38 billion won ($32.4 million) last month. It also sold off DK UIL Co., its cell phone and phone parts making unit, at 58.6 billion won last Monday.

The steelmaking industry grappling with overcapacity and global business slump was subject to government-led restructuring outline on ailing industries.

By Ko Jae-man and Moon Ji-woong

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