* Western sanctions hitting Iran's industrial economy
* POSCO says units follow strict guidelines on trade with
By Jonathan Saul
LONDON, March 12 South Korean steelmaker POSCO
, minority-owned by Warren Buffett's Berkshire
Hathaway, has cut ties with government entities and sensitive
industries in Iran such as energy and continues to trade with
private firms, a letter showed.
Tough Western measures imposed on Iran over its disputed
nuclear programme have hit many sectors of its economy including
steel and other metals, where it is heavily dependent on
imports. Tehran says its atomic work is peaceful.
Earlier this month, intelligence and diplomatic sources told
Reuters commodities giant Glencore had supplied
thousands of tonnes of alumina to an Iranian firm that provided
aluminium to Iran's nuclear programme.
Separately, Swiss-based trade house Trafigura confirmed it
had traded with the Iranian firm that the EU says has links to
Iran's nuclear programme.
In a letter sent to U.S. pressure group United Against
Nuclear Iran (UANI) dated Feb. 28 and seen by Reuters, POSCO, a
top global steelmaker, said it had scaled down business with
"Certain of POSCO's subsidiaries continue to engage in
transactions in Iran," POSCO's chief legal officer Song Se-Bin
wrote in the letter.
"However, these transactions involve only the civil market.
Moreover, these POSCO entities engage in transactions only with
Iranian entities that POSCO believes, based on its best due
diligence efforts, are not owned or controlled by the Iranian
Song said POSCO entities had "completed, terminated or
assigned all of their activities related to the sensitive
sectors of the Iranian economy - the energy, defence and nuclear
"Although these efforts have resulted in the loss of certain
projects and substantial financial losses to the POSCO entities,
POSCO believes it important that it be regarded as a responsible
A targeted campaign by UANI, which includes former U.S.
ambassadors as well as former CIA and British intelligence
chiefs on its board, has led to several foreign companies in
sectors including shipping to exit Iran. UANI, which is funded
by private donations and backs tougher sanctions on Tehran, had
called on POSCO to cease its Iran trade.
UANI chief executive Mark Wallace said it appreciated the
company had taken multiple steps to reduce its Iran business.
"We continue to call, however, for POSCO to fully end its
business in Iran," said Wallace, a former U.S. ambassador to the
"Given the nature of the business, the only way for POSCO to
eliminate its exposure to the Iranian regime and IRGC-controlled
entities is to completely pull out of the country," he said,
referring to the Revolutionary Guards, which reports directly to
Iran's Supreme Leader.
POSCO, which is 5.1 percent owned by Berkshire Hathaway
, is the world's No.5 steelmaker by output.
Buffett's business partner Charlie Munger has frequently
praised POSCO as being, in his opinion, the best-run steelmaker
in the world. Buffett, via his assistant, could not be
immediately reached for comment.
When contacted about its Iran deals, POSCO spokeswoman
Jiyoung Kim said: "POSCO and its subsidiaries stopped trades
with Iranian government and state-run Iranian companies.
"POSCO will abide by the law regarding U.S. sanctions on
Iran, and plans to actively cooperate with U.S. policies."
Sanctions imposed by the European Union last year on sales
of steel and other key materials to Iran have prompted many
traders and producers to halt sales, hitting Russian steel
producers, which were heavily reliant on the Iranian market.
A UK based executive with a steel and iron trading firm said
it had halted trade with Iran partly over payment difficulties
due to banking restrictions, but also over image.
"I don't think companies want to be seen to be dealing with
them purely because of a bad company image, reputation risk.
Also, it has become more difficult to trade," the source said.
"There are so many places we can trade with other than Iran that
I think we can afford to miss that one out for the time being."
POSCO's Song said in the letter it followed strict
guidelines on trading with Iran which required written
confirmation from the Korea Strategic Trade Institute, which is
under Seoul's economy ministry, that any investment or trading
did not directly or significantly contribute to enhancing Iran's
oil capabilities or involve blacklisted entities or individuals.
Song said POSCO personnel would "face disciplinary action
for non-compliance" if they did not adhere to its trading
policies in Iran.
"POSCO shares UANI's goal of thwarting Iran's nuclear
programme," Song said.
Despite tougher measures, western powers face difficulties
in curbing Iran's ability to do business with the rest of the