Posco Energy, an affiliate of South Korean steel giant Posco, appears to be in the process of ditching its money-losing fuel cell business by establishing a new joint venture with a third party, a lawmaker claimed Thursday.

According to documents compiled by Rep. Kim Kyu-hwan of the main opposition Liberty Korea Party, the company has been seeking ways to spin off its fuel cell manufacturing unit first and then turning it into a joint venture with new investors. The plan is widely expected to mean Posco Energy’s exit from the fuel cell business, which it has been losing money in for years.

The company plan says that it would have a local manufacturing company as a strategic investor for the joint venture. It would sell its shares in the joint venture later on, industry observers said.

In 2007, the company invested $29 million in US firm Fuel Cell Energy and another $55 million later. It declined to answer how many shares it holds in the Nasdaq-listed company.

The company has been losing money in recent years. Replacing faulty stacks has cost the company a fortune, according to observers.

Rep. Kim, however, raised concerns over the possibility of Posco Energy transferring its technology overseas, saying the company had spent taxpayers’ money for years. The government provided a total of around 39 billion won ($35 million) until last year to support Posco’s fuel cell development, he said.

Posco Energy denied the reports, saying that the joint venture scheme is just one of many plans to deal with the losses.

“We have been working to improve losses for three years now. But the plans are not being drawn up in order to sell our fuel cell business,” said Sohn Chang-ho, a senior PR official at Posco Energy.

By Cho Chung-un (christory@heraldcorp.com)