POSCO has signed a memorandum of agreement (MOA) with Iranian steelmaker, Pars Kohan Diar Parsian Steel (PKP), to jointly build a steel mill in the Middle East country incorporating its FINEX technology, the company said Monday.

The world's fourth-largest steelmaker said it will cost about $1.6 billion to construct the FINEX plant, capable of producing 1.6 million tons of steel annually, in Iran's Chabahar Free Trade-Industrial Zone (CFZ). POSCO Engineering & Construction (E&C) will build the mill.

During the Korea-Iran Business Forum held in Tehran, Monday, POSCO's electricity-generating affiliate POSCO Energy also signed a memorandum of understanding (MOU) with PKP to construct a 500 megawatt power plant using excess gas generated by the envisioned steel mill.

In cooperation with Korea Electric Power Corp. (KEPCO), the company will also construct a desalination facility nearby to desalinize 60,000 tons of seawater every day.