Essar Steel Ltd, India's second-biggest private steel maker, and Uttam Galva Steels Ltd were among several Indian firms to express an interest in buying the electronic steel furnace, the official said.
"We hope to sell a mini-mill as part of our plans to focus on high-end steel and because demand for low-end steel products is weak in the domestic market," the official said by telephone.
While some Indian steel makers had shown an interest, there had been no formal bids for the steel-making unit, he said.
He declined to say how much a potential sale might be worth, but media reports have valued a sale at around $100 million.
The mini-mill that is up for sale is not currently operating, the official said.
In September, Essar agreed to buy two steel-making units of South Korea's INI Steel for $100 million.
Posco has been looking for opportunities to bolster its overseas business, particularly in China and India, as its domestic market becomes saturated.
India produces 38 million tonnes of steel a year, and the industry estimates that will rise to 70 million tonnes by 2015 as new plants start up, spurred by high prices and strong local demand.
Shares in Posco closed down 0.46 percent at 217,000 won compared with a 0.29 percent fall in the broader index.