Steel has long supported our daily lives and industries, but over time, it may reach the end of its useful life and become scrap. POSCO group saw new potential in this discarded steel. By completing an electric arc furnace that uses electricity to melt steel scrap into molten steel, the Group has laid the groundwork for transitioning to lower-carbon production processes. What role will electric arc furnaces play in the transformation of the steel industry? Here begins the story of steel reborn to meet the needs of a changing world.
Steel is woven into nearly every aspect of our lives. It supports massive bridges, forms the homes and workplaces we rely on, and is an integral part of the vehicles that carry us to and from work. Yet some steel eventually corrodes and rusts, appearing to have reached the end of its useful life. Around the world, however, efforts are underway to recycle this rusted steel and give it new life—much like sculptors who melt and reshape steel into new forms.
This transformation is not limited to the world of art. On a far greater scale, the cycle of steel continues across industrial sites. One such site is the newly completed electric arc furnace (EAF) at Gwangyang works.
An EAF is a steelmaking facility that uses electricity to melt steel scrap and produce molten steel. By reusing steel that has already served a purpose, EAFs make a significant contribution to resource circularity. They can also reduce carbon emissions compared with the conventional blast furnace process,* making them a promising option for addressing global decarbonization requirements.
Alongside EAF technology, POSCO group is developing HyREX, a Korean hydrogen reduction ironmaking technology that removes oxygen from iron ore using hydrogen instead of coal as the reducing agent. As commercializing HyREX will take time, the Group moved forward with the introduction of an EAF as one of the practical solutions available for reducing carbon emissions. Construction began in February 2024, and in June, a large-scale EAF with an annual production capacity of 2.5 million tons was completed at Gwangyang works, laying the foundation for a transition to lower-carbon production processes.
* Compared with the 2017–2019 average, POSCO’s baseline period for calculating carbon reductions. The reduction rate may vary depending on steel scrap supply conditions and the power generation mix. Based on crude steel production and Scope 1 and 2 emissions.
The EAF at Gwangyang works incorporates continuous charging technology and a hot metal–molten steel mixing process. In the enclosed continuous-charging EAF, scrap is fed through the side of the furnace, allowing it to be melted continuously without opening the furnace roof. This helps reduce heat loss and fugitive dust emissions. Blending hot metal from the blast furnace with molten steel from the EAF is also expected to help stabilize product quality and reduce greenhouse gas emissions.
This transition also presents practical challenges that must be addressed. Steel production has traditionally used by-product gases generated during ironmaking, together with liquefied natural gas (LNG), to generate electricity. A shift toward EAF-based production could reduce the availability of these by-product gases, requiring steelmakers to purchase additional electricity from external suppliers.
Energy costs may also rise as relatively inexpensive coal is replaced by electricity. This could increase steel production costs and affect not only the price competitiveness of steel products but also the competitiveness of steel-consuming industries. To ensure the steel industry’s decarbonization remains sustainable, industrial electricity rates must therefore be discussed and set at reasonable levels.
As global competition intensifies over resource and energy supply chains, securing a stable electricity supply has emerged as a critical priority. Industrial policy can no longer be considered separately from energy policy. Japan, for example, is pursuing approximately JPY 150 trillion in public-private investment—including JPY 20 trillion in government funding—to advance its Green Transformation (GX), providing active financial support across industries. This reflects the recognition that companies face limits in securing competitiveness on their own, particularly when the development of decarbonization technologies such as carbon capture, utilization and storage (CCUS)* and next-generation nuclear power requires massive investment. As such global examples demonstrate, Korea must also establish a strong clean energy industrial foundation if POSCO group’s EAF and HyREX technologies are to take root successfully.
* CCUS (Carbon Capture, Utilization and Storage): Technology that captures carbon dioxide for use in industrial applications or permanent storage.
Steel scrap is no longer household waste to be discarded at the end of its useful life. It has become a vital resource for advancing resource circularity and ensuring a stable supply of raw materials.
Securing a reliable supply of high-quality scrap is therefore becoming increasingly important. Because the quality of raw materials directly affects the quality of steel products, the stable operation of EAFs requires an ecosystem capable of reliably collecting and sorting steel scrap. Building on this foundation, the broader adoption of EAFs and other lower-carbon production processes is expected to accelerate Korea’s progress toward its Nationally Determined Contribution (NDC).
Steel remains a precious resource. As it evolves in step with the needs of our time, its transformation will continue.
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