POSCO announced Wednesday that its construction subsidiary POSCO A&C signed a contract to build a housing complex for a coalfield in Sakha Republic in eastern Russia.

Under the contract, issued by Russia’s largest resource developer Mechel, POSCO A&C will build a 48,000 square meter housing compound for workers at the Elga coalfield in Sakha Republic.

POSCO A&C plans to begin works on the compound in August and complete the project by June 2013.

The facilities in the compound will be built using the modular-system architecture method, the company said.

In modular-system construction, sections of buildings are manufactured as transportable modules at a factory, and assembled at the site.

According to the company, the modular-system method can lower the construction costs by up to 20 percent, and shorten the construction time by as much as 50 percent compared to conventional methods.

In addition to the housing compound contract, POSCO also signed a memorandum of agreement regarding resource development and a joint stainless steel venture with Mechel.

The agreement calls for collaboration on stainless steel production facilities and on resource development projects in Siberia and in other countries, POSCO said.

The contract for the housing compound, signed in Moscow on Tuesday, is the first tangible result gained from the memorandum of understanding POSCO signed with Mechel regarding collaboration on resource and infrastructure development in November, the steelmaker said.

POSCO, which has been investing increasing amounts in overseas resource development projects, is hoping that its subsidiary’s contract with Mechel will give it an edge in taking part in the developing the coalfield when the project begins in 2012.

According to POSCO, Elga coalfield is estimated to contain more than 2.2 billion metric tons of high-grade coal.

“Combining POSCO’s experience in construction, and the mining experience and abundant resources of Mechel will allow (the companies) to lead the world’s steel industry,” POSCO chief executive Chung Joon-yang said in a statement.

By Choi He-suk  (cheesuk@heraldcorp.com)