POSCO Chemical is also focusing on the production of anode materials, having completed the construction of the second anode material factory in Sejong at the end of 2019. As to respond to demands for secondary battery material, the company is expanding the anode production system, which currently amounts to 44,000 tons per year. POSCO Group has been prioritizing the development of core materials for secondary battery for the past few years. POSCO Newsroom presents to you the details.

l What Does the Secondary Battery Material Business Mean for POSCO Group?

POSCO Group has identified the secondary battery material business as a new growth engine. In November 2018, POSCO Group set the proportion of overall sales in the Steel, Global & Infra, and New Growth sectors at 40, 40, and 20 respectively, and is to be carried out until 2030. As for the New Growth sector, POSCO’s secondary battery material business aims to obtain 20% of the global market share and expand sales to 17 trillion KRW by 2030. The advancement of the new business is expected to drive the group’s overall growth.

The secondary battery consists of four materials: cathode, anode, electrolytes and separator. Among them, POSCO Group is currently producing cathode and anode materials, as well as lithium, which is a raw material of cathode. Why has steelmaker POSCO and its affiliates joined the secondary battery material business? There are three main reasons for this.

The first reason is the significant change in the industrial environment. Demand for secondary battery materials is continuing to increase owing to the rapid growth of eco-friendly mobility business and energy storage systems. Electric vehicles (EV) are in the center of these changes.

Major research institutes revealed that the global electric vehicle market and the LiB (Lithium-ion Battery) market — LiB being one of the most typical forms of secondary batteries — is expected to grow rapidly. The global electric vehicle market, on the basis of BEVs and PHEVs, will see a boost in its sales from 3 million in 2020 to 9 million in 2025. The LiB market size will also expand considerably, recording a growth rate of more than 22% per year (from 329 GWh in 2020 to 610 GWh in 2025).

*BEV: Stands for Battery Electric Vehicle. Runs 100% on battery alone.
*PHEV: Stands for Plug-In Hybrid Electric Vehicle. Runs on battery as well as its on-board engine.

The advancement of the electric vehicle market is estimated to drive growth in the secondary battery market as well. By 2030, the market will expand 3.2 times in comparison to the present market, which will also trigger the cathode, anode material, and lithium market. These changes in the market are a good opportunity for POSCO Group to demonstrate its capabilities since POSCO has a strong understanding of the automotive industry with its experience of supplying steel products to global automakers.

The second reason is that POSCO has been handling numerous raw materials and subsidiary materials needed for the steelmaking process, including iron ore, coal, nickel, chromium, and manganese. Given that resources are scarce in South Korea, this experience is crucial and directly connected to securing materials required for producing secondary battery materials.

Finally, POSCO has the capability to expand the material business, utilizing various process technologies and by-products that are generated in the steel making value chain. The production of synthetic graphite is one such example. Coal tar is a by-product created while making cokes in POSCO Steelworks. PMC Tech, an affiliate of POSCO Chemical, processes this coal tar into needle cokes, with which POSCO Chemical in turn produces synthetic graphite, a raw material for anode.

l POSCO Group’s Secondary Battery Material Business Structure

Then how is POSCO Group advancing into the secondary battery material business? The main business structure is as seen in the diagram below.

POSCO supplies lithium and coal tar, which are raw materials for cathode and anode materials. With the provided materials, POSCO Chemical produces cathode materials such as, NCM* (Nickel, Cobalt, Manganese) and LMO* (Lithium, Manganese, Oxide), as well as natural graphite, an anode material. The resulting cathode and anode materials are supplied to the battery manufacturer to make the final product — Lithium-ion battery. Initiating this year, POSCO plans to expand the business into producing synthetic graphite by utilizing needle cokes produced by PMC Tech, a group affiliate.

l Where POSCO Stands in the Current Secondary Battery Material Market

(1) POSCO – Securing and manufacturing raw materials of ‘lithium’
POSCO has POSLX (POSCO Lithium eXtraction) technology, a unique lithium extraction technology. PosLX technology utilizes ore and brine to make battery-grade lithium. POSCO was the first company in Korea to produce lithium carbonate and lithium hydroxide in 2017 and 2018, respectively. POSCO’s endeavor to secure overseas raw materials continued, and as a result, it signed a long-term contract with lithium producer Pilbara Minerals in Australia to purchase lithium concentrate, the annual production capacity from which is projected at 40,000 tons. POSCO also signed a contract with Galaxy Resources Limited and acquired mining rights at Hombre Muerto Salt Lake in Argentina.

Once the lithium ore plant in Gwangyang and the saltwater lithium plant in Argentina are completed in 2022 and 2023, respectively, POSCO estimates to spearhead the per-year production capacity of lithium hydroxide to 65,000 tons. The new system is to supply materials to POSCO Chemical in a more stable manner.

(2) POSCO Chemical – Establishing a mass-production system of cathode and anode materials
In April 2019, POSCO launched POSCO Chemical, which is a merger between POSCO ChemTech and POSCO ESM. POSCO ChemTech is a manufacturer of anode materials, and POSCO ESM produces cathode materials. The merger was carried on to improve synergy between the two groups’ energy materials businesses as well as augment the company’s capacity by integrating the marketing-production-R&D system. After the successful merger, POSCO Chemical has been accelerating investment in securing production facilities.

For cathode materials, POSCO has an overall yearly production capacity of 44,000 tons at a group level — Gumi plant (9,000 tons), Gwangyang plant (30,000 tons), and ZPHE in China (5,000 tons). ZPHE (standing for Zhejiang POSCO-HUAYOU ESM) is a joint venture with China’s Huayou Cobalt Co., Ltd., the world’s largest cobalt producer. Gwangyang plant specializes in manufacturing products for electric vehicles, and as a measure to meet market demand, the plant is to increase production capacity to 90,000 tons per year in the future. This amount enables the production of up to 750,000 electric vehicles, given that each vehicle can travel 500 km for a single charge. The cathode materials produced at Gwangyang plant are supplied to multiple electric vehicle battery production lines located in Korea, Europe, China, and the U.S.

▲ POSCO Chemical’s Gwanyang plant reaches 165,203㎡ equivalent to 20 soccer fields.

The Gwangyang cathode material plant, which was completed on May 14, has adopted POSCO Group’s state-of-the-art Smart Factory technology. The technology enables automatic transportation of raw materials, precursors, half-finished products, and end products, as well as an integrated control center in charge of the automated warehouse, product design, process management, and shipping. This accomplishment has helped secure competitiveness by improving productivity and stabling quality control.

The improvement of secondary batteries is crucial in the advancement of electric vehicles. As this is directly related to better mileage, the demand for high-capacity cathode materials that have a high proportion of nickel is becoming increasingly high. For this reason, POSCO Chemical is currently focusing on the mass-production of cathode materials with nickel proportion of 65% and also developing materials that are more than 90% nickel-based.

As for anode materials, the company has enabled the production of natural graphite, an anode material, by establishing facilities at the Sejong plant no.2 last year. This achievement is to facilitate annual production of 44,000 tons, ranking high amongst global producers. The company plans to make efforts to broaden the product line and build another plant in Pohang to manufacture synthetic graphite. POSCO Chemical is innovating into a ‘Total Supplier’ of secondary battery materials by producing both cathode and anode materials and is taking its place firmly in the electric vehicle market.

(3) Cooperating on R&D projects with RIST & POSTECH
POSCO is working closely with RIST and POSTECH to strengthen its competitive edge in R&D for secondary battery materials. The group’s secondary battery material research center, which was established in June last year, is developing next-generation cathode and anode materials as an effort to improve the performance of electric vehicles. Devising new process technologies that can help maintain cost competitiveness in the battery market is also another main task of the research center. By evaluating secondary battery performance through its unique infrastructure, the research center has been providing batteries that are manufactured with self-produced cathode and anode materials for various customers and tasks.

In May 2019, POSTECH established an ‘Industrial-Academia Research Center’ with POSCO Chemical to strengthen industry-academia cooperation through joint research in the three following fields: secondary battery materials, carbon materials, and chemical materials. The center also aims to foster professionals of each area by utilizing scholarship and dispatch programs. The first phase of the cooperation between POSCO Chemical and POSTECH, is to be carried out until May 2024. Main tasks include developing high-performance cathode and anode materials, and new premium activated carbon materials.

The secondary battery material business has definitely taken its place as POSCO’s new growth engine. The past decade is full of the company’s endeavor, and more are expected as the business is set to serve as the driving force of POSCO in the next 50 years to come.

*Related article: Everything You Always Wanted to Know About Secondary Batteries

However, the Lighthouse Factory POSCO does not stop at simply leading the introduction of the Fourth Industrial Revolution technologies. What’s more? Here are the three factors that make POSCO stand out.

① Challenging the Impossible — POSCO’s Smart Blast Furnace

An unmanned storehouse or an automotive parts assembly factory run by robots could be the first thing that comes to mind when one hears the word ‘AI factory.’ Another might think that Artificial Intelligence could be applied only in specific areas, like the information technology industry. A blast furnace is a gigantic facility with a height equivalent to a 40-story building. On the inside, it is full of a mixture of solids and liquids, so turning it off or ‘looking’ inside seems impossible. Due to these many factors, applying AI to a blast furnace and making it ‘smart’ was considered nearly impossible.

POSCO stood up to this challenge. In 2016, the term ‘Fourth Industrial Revolution’ began to take its place in the industry. POSCO was one step ahead, but not in a hurry. It moved on to Step-by-step digitization and smartization with caution and care. At first, POSCO tried to do this with the technology of a global IT company but did not get satisfactory results. The new technology alone wasn’t enough. However, when POSCO’s unique expertise, intuition, and knowledge — along with its field experts — were combined with it, the advanced AI blast furnace could be born.

▲ The AI blast furnace is made with the combination of vast, sophisticated data, and the experience and intuition of POSCO experts. Deep learning enables optimal results and automates them to reduce human errors and increase productivity.

POSCO field experts — the technicians and engineers — standardized the main variables that determine the state of the blast furnace into Big Data. They enabled the blast furnace to conduct deep learning to extract optimal result value by imitating their know-hows accumulated for over 30 years. Facilities were also steadily improved so that the IoT could replace the manual work. As a result, POSCO boosted the daily production of molten iron by 240 tons. Additionally, workers could focus on advanced work for more creative performance. POSCO saved 250 billion KRW by carrying out 321 smart tasks — including the AI blast furnace — for the past four years.

Through the AI blast furnace, POSCO was able to break away from the old concepts of steel mills. POSCO’s “Technology for the automated control of blast furnace based on deep learning AI” is currently registered and protected as the National Core Technology of Korea (August 2019). POSCO is currently establishing smart factories not only in the blast furnace but also in the overall steelmaking, rolling, and surface treatment process and is creating high-quality smart steelworks.

② POSCO Smart Factory: A Collaboration Of Academia, SMEs, And Start-ups

There is another special feature behind the Lighthouse Factory POSCO — the collaboration of academia, SMEs, and startups in establishing the Smart Factory. As seen below, the World Economic Forum acknowledged POSCO’s effort in forming the collaboration model.

▲ A World Economic Forum article stating the reason POSCO was chosen as a Lighthouse Factory.

POSCO is actively cultivating AI experts in-house and is working with POSTECH for the cause. POSTECH has the best faculty of the artificial intelligence field in Korea. POSCO AI Expert Course, which began in 2017, is a program where selected outstanding POSCO personnel receive training from POSTECH professors. This course has resulted in more than 60 POSCO AI experts in three years. These AI experts are working to build smart factories in the work field.

The collaboration included SMEs and start-ups as well. POSCO developed the AI blast furnace with ‘ECMiner’ since 2016. ECMiner is an SME specializing in data mining*. It created a system that can automatically identify, analyze, and maintain the combustion condition of the blast furnace by combining its data mining technology with POSCO’s accumulated data. In the past, the combustion status was left to the manual labor of workers, checking through the wind hole, and judging by experience. However, with this system, the data can now be taken care of automatically. It also maintains the appropriate combustion level of the blast furnace, which reduces the amount of coal injected. This enables an overall cost reduction.
*Data mining: A technology that looks for hidden, valid, and potentially useful patterns in huge data sets, extracts feasible information, and makes decisions accordingly.

The collaboration resulted in a win-win for both POSCO and ECMiner. POSCO succeeded in creating an AI furnace with Korean technology, and ECMiner also benefited from the experience of processing huge amounts of data at POSCO. All academia, SMEs, and start-ups that participated in the building of POSCO Smart Factory, including ECMiner, can help construct a new one in another factory based on technology experienced at POSCO. This is expected to accelerate the proliferation of smart factories in Korea.

③ Sharing With The Industrial Ecosystem

The Lighthouse Factory POSCO shines brighter for the third factor. On January 9, Korean president Jae-in Moon visited POSCO Pohang works.  POSCO CEO Jeong-Woo Choi said:

“With the Smart Factory, POSCO has reduced production cost of 250 billion KRW for four years. And to relieve the wage gap with business partners, POSCO has extended an additional 270 billion KRW to outsourcing expenses for the last three years. Increased outsourcing expenses raises overall costs. However, POSCO is offsetting this through endless innovation. Through these measures, POSCO aims to foster the competitiveness of the whole industrial ecosystem, and then, in turn, enhance national competitiveness. POSCO’s management philosophy lies here.”

▲ Image source: KTV Youtube video

POSCO willingly shared the achievements of the smart factory project to solve the real problems many partner companies face. At first glance, this might simply seem like a ‘generous side’ of a large company, but in reality, this wasn’t an easy step. POSCO made this possible with its capacity earned through intense internal innovation. This is a good example showing how POSCO innovation isn’t just about POSCO.

POSCO went on to expand the benefits to SMEs who do not have direct business with POSCO. With the support service to build Smart Factory for shared growth, POSCO has provided the Smart Factory technology to 110 SMEs last year alone — 59 of which are companies with no direct business. The service will support 1,000 SMEs by 2023, with no limits to the subject. This is expected to increase the competitiveness of SMEs, which will, in turn, improve productivity and create new jobs.

▲ POSCO’s Smart Factory project not only increases POSCO’s competitiveness but also empowers the entire industrial ecosystem. It also helps in resolving current issues like narrowing the wage gap and creating new jobs.

This is what POSCO’s innovation is all about. The willingness to share with something that was earned hard. POSCO the lighthouse factory is indeed shining the light to a brighter future of the manufacturing powerhouse Korea.

POSCO Pohang Works was selected as the ‘Lighthouse Factory’ for spearheading innovation in manufacturing by the World Economic Forum (WEF) in July last year, opening a new horizon for smart blast furnaces. The WEF consultant, who visited Pohang Works for site review, showed great interest in the live monitor-controlling of the blast furnace. This complex and huge furnace is controlled by pairing the expertise of POSCO workers with AI technology. On January 9, South Korea’s President Jae-in Moon visited the site and watched the world’s smartest furnace at work.

POSCO is also striving to strengthen its industrial ecosystem by sharing its Smart Factory platform with business partners — including SMEs. Let’s take a closer look at how POSCO is working on its Smart Factory and pursuing Corporate Citizenship.

l POSCO’s Blast Furnace — At the Forefront of the Fourth Industrial Revolution.

Since the term ‘Fourth Industrial Revolution’ was first used at the 2016 Davos Forum, it has become the mainstream of all industries. Companies started working on to quickly acquire the core technologies of the Fourth Industrial Revolution — like Big Data, Artificial Intelligence, and the Internet of Things. Twice a year, Davos has been designating factories that are leading innovation in manufacturing as ‘Lighthouse Factories’. Last July, POSCO became the first South Korean company to be announced as a lighthouse factory.

The No.2 blast furnace at Pohang Works could be called the core of the Fourth Industrial Revolution Technology. POSCO embarked on the ‘digitization’ of the blast furnace in 2016 when the term ‘Fourth Industrial Revolution’ came about. Since the blast furnace was originally dependent on field workers’ heuristic knowledge, by ‘digitization’, POSCO worked on standardizing all accumulated data.

The blast furnace is a gigantic facility with a height of 110 meters — equivalent to a 40-story building. Inside the blast furnace flows a mixture of solids and liquids whose temperature rises as high as 2300℃. All these factors make it impossible to ‘look’ inside the blast furnace, hence, digitizing the variables of this huge blast furnace was more complicated and difficult than expected. The seemingly impossible task of ‘standardizing data’ of human knowledge marked the start of the smart furnace.

The accumulated data became the base of big data. Since 2017, POSCO has been working on deep learning with big data. Through deep learning, the blast furnace can self learn from the numerous cases given. This process called, “Smartization” enables the system to predict and control the potential variables, and to derive optimal results. The IoT has also accelerated the establishment of smart furnaces. In the past, multiple factors such as molten iron temperature, the amount of fuel and raw materials, and so on were left to the manual labor of workers. However, through IoT, high-definition cameras and sensors can take care of the data automatically.

▲ The internal temperature of the furnace can go up to 2,300℃. In the inside, several materials like iron ore and coke are mixed, causing various chemical reactions. It’s like a huge pressure vessel that’s 40 stories high. POSCO succeeded in data standardizing and automating the blast furnace.

As a result, Pohang No.2 Blast Furnace has become capable of self-control and prediction to an artificial intelligence level, giving it the name, ‘AI blast furnace’. With the experience of experts who have worked for more than 30 years at ironmaking, the smart furnace boosted the daily production of molten iron by 240 tons. Annually this amounts to 85,000 tons with which automakers can produce 85,000 more cars.

There is always a concern that follows these kinds of changes, “Won’t AI make people lose jobs?” But the answer is “No.” Instead of looking into the furnace all day, workers can focus on more advanced work with their Domain Knowledge. This enhances the possibility of more creative performance.

l What Makes POSCO’s Smart Factory Special?

Currently, leading global companies are adopting the smart factory platform. Then what makes POSCO’s Smart Factory more special? The answer lies in the platform established for the ‘Continuous Processing’ — a special term of steelwork. POSCO doesn’t stop at applying this platform to just furnaces. It has gone on to extend these smart factories to the overall steelmaking process. PosFrame, the engine of POSCO’s Smart Factory, is its unique factory platform specified for continuous manufacturing processes.

The steelmaking process is continuous, running smoothly from production planning to delivering the final product to the customer. Therefore, applying the smart factory platform to steel works is quite challenging — with a much bigger scale — than applying to a single factory that produces a single item. Pohang Works is massive in size, with hundreds of factories manufacturing hundreds of different steel products. In such an environment, data from each site should be gathered, organized, and standardized so that anyone can process it. This is one of the main functions of PosFrame.

Let’s say that the steelmaking process starts from A and ends at Z. When PosFrame is applied completely to the steelworks, it is possible to trace the cause of an issue that occurred in Z to A.

▲ A Smart Factory operation concept in an integrated steelwork. The cause of an issue occurring at the later part of the process can be automatically tracked to the earlier part of the process, diagnosed, and resolved.

l POSCO’s Technology For All Business Partners to Share

How is Corporate Citizen POSCO dealing with this unique technology? POSCO isn’t planning on making this technology exclusive. Instead, POSCO is working on expanding the smart factory technology to business partners including SMEs.

Dongkuk Industries, which has factories in Pohang and Siheung, is a company that processes POSCO’s hot rolled steel into high-quality cold rolled steel. This product is then supplied to companies that produce automotive parts. At Dongkuk Industries, steel goes under the pickling process, where hydrochloric acid (HCl) is used to remove scale on the product surface. This takes a great deal of time since each customer demands different quality requirements. Since it is nearly impossible to match each requirement, Dongkuk Industries pickled all materials even though each POSCO hot rolled steel had different scales. Naturally, productivity decreased, and this is where POSCO’s Smart Factory technology stepped in.

First, through PosFrame, POSCO sends predicted data showing where and how much scale is on the supplied hot rolled steel. This predicted data is received at the “AI for optimal pickling” in Dongkuk Industries. In the past, the pickling conditions were calculated manually by workers, but now this AI automatically extracts the optimum value based on the data obtained from PosFrame. After pickling, the resulting data is passed back to PosFrame. As POSCO hot rolled steel is processed into high-quality cold rolled steel here, its data are accumulated in PosFrame as big data and advanced through repeated learning. The data on both sides are exchanged repetitively, enabling the production of an optimized product — as if produced in a connected plant. The application of the Smart Factory in Dongguk Industries minimized the time required for the pickling process while securing product quality required by the customer. This increased productivity by 60%, and high-quality material sales by 1.5 times.

▲ Dongkuk Industries established a Smart Factory with POSCO. (From the top left clockwise) the front view of the Pohang factory; the pickling line; the hydrogen furnace; and the wide shear line. (Photo credit: Dongkuk Industries)

POSCO is also concentrating on Smart Factory consulting for SMEs. This service isn’t limited to direct customers but expanded to other business partners, including secondary customers. POSCO has engaged in support service to build Smart Factory for shared growth with the Ministry of SMEs and Startups — establishing Smart Factory in 110 companies until last year. At the same time, POSCO also provides ‘Smartification Consulting’ to enhance competence, thus, delivering advanced field expertise through POSCO’s unique innovation technique QSS(Quick Six Sigma). By 2023, POSCO is to contribute 20 billion KRW to empower 1,000 companies.

POSCO is operating seven major programs for shared growth, and some of them are as follows — ‘Open Purchase’ offering fair trading opportunities; ‘Proper Payment On Time’ abolishing the lowest price bidding system and giving payment in cash on time; ‘Corporate Citizenship Job Matching’ training job seekers and arranging employment at partner companies. Additionally, POSCO has aided 1 trillion KRW, leading the way in establishing a Venture Fund of 2 trillion KRW, and a Venture Valley to support start-up activities for the youth.

POSCO has become the “lighthouse” of the global manufacturing industry with its Smart Factory. And in Korea, POSCO is actively working as a guide of Smart Factory for business partners.

A half-century ago, POSCO was a just new ‘kid’ in the industry but now, the company proudly ranges with the world’s top steelmakers.

One billion. The number itself is remarkable, of course, but there are countless details the number alone can’t fathom. To dig deep into what it all means, POSCO Newsroom traces the footsteps that led to the one-billion record. POSCO Newsroom reports.

l The Footsteps that Created the Legend

After the first drop of molten iron on June 9, 1973, POSCO shipped out its first steel products on August 1 the same year. In 1981, the company saw the completion of phase 4 Pohang Steelworks construction, followed by the opening of Gwangyang Steelworks in 1983. In 1989, POSCO achieved the cumulative crude steel production of 100 million tons. POSCO completed all construction work of then Pohang Iron and Steel Company in 1992, thereby increasing annual crude steel production capacity to 21 million tons. Since then, POSCO saw a steady increase in its production capacity, leading to the current annual production of 37 million tons of steel.

In 1994, POSCO achieved the crude steel production of 200 million tons. In the same year, the company also was listed on the New York Stock Exchange (NYSE) before any other Korean company. In 1998, POSCO’s production shot through 300 million tons, followed by 500 million tons in 2005. 2005 also marked the first year POSCO made the DJSI list for its sustainable management practice.

* DJSI Dow Jones Sustainability Index:
Launched in 1999, the DJSI evaluates a company’s sustainability performance — it’s the longest-running global sustainability benchmark worldwide and has become the key reference point in sustainability investing for investors and companies. The DJSI assesses various issues including corporate governance, climate change mitigation, and labor practices reflecting the trend to reject companies that do not operate ethically.

In 2011, the year when the cumulative crude steel production broke 700-million mark, Pohang No.1 furnace was selected as Korea’s economic National Treasure No.1 by domestic media. The company went on to received the prestigious $10 billion Export Tower award in 2017 — and finally this year, shortly after its selection of global lighthouse factory, POSCO achieved a cumulative steel production of one billion tons. The year 2019 is also the tenth year POSCO came in the top of the WSD competitiveness ranking, solidifying its stature as the No.1 steelmaker. In each year towards POSCO’s steady race to one billion, POSCO left marks of growth, both big and small.

The one-billion production was not an event created overnight. It was a long, arduous and enduring process holding the heart and souls of people in and out of POSCO communities.

l Tracing One Billion POSCO across Products

Tracing POSCO steel across different product categories —such demand industries as automobiles, construction, industrial machinery— the hot-rolled steel was the most sought-after, with 330 million tons in sales volumes.

Cold-rolled steel came in second — altogether 270 million tons were sold. This product line includes many high-end products such as GIGA STEEL and PosMAC, etc.

What about thick steel plate? As an indispensable product for Korea’s industrial development, 140 million tons of thick steel plate was produced. As for stainless steel, POSCO produced 71 million tons. In addition, POSCO produced 42 million tons of wire rod, which acts as a bridge cable, etc. POSCO also produced 140 million tons of other products which include slabs and blooms sold to other steel companies such as rolling mills.

l One Billion POSCO Went to…

POSCO Newsroom zoomed in on the demand industries to which POSCO steel was sold for the past ten years. With 340 million tons of steel sold across industries, the auto industry and construction sector (including machinery and pipes) took 83 million tons each. The shipping industry took another 29 million tons, whereas the electrical and electronics sectors took 22 millions. 120 million tons went on to be utilized for pressure vessels, re-rolling, surface treatment, distribution, etc. To grasp what this series of numbers in millions, let’s convert these sales volumes into one billion tons of crude steel production.

50% of one billion tons were used in the automotive and construction sectors, amongst which about 250 million tons were sold to the auto industry. Presuming a midsize car weighs one ton, this means POSCO steel produced 250 million cars.

What about the construction sector? 250 million tons can raise 4,910 Lotte World Towers.

The shipbuilding industry took another 10% — 86 million tons of steel which can build 2,392 VLCCs (Very Large Crude-Oil Carriers) each weighing over 300,000 tons. The electrical and electronics sector used 64 million tons of steel which can make 6.4 billion refrigerators for household use.

The above numbers mean much more than the sheer scale of POSCO’s steel production. What they show is the fact there had been sustainable demand for steel, and that the growth of Korea’s key industries coincided with the fate of POSCO.

As Korea’s industries became more sophisticated and advanced, so did the country’s economic power. As the above graph demonstrates, both the historical data of Korea’s GDP and POSCO’s steel production are heading towards the same direction.

In 1973, when POSCO first produced crude steel, Korea’s GDP stood at $13.9 billion. In 2018, at the cusp of the one-billion mark, Korea’s GDP shot through the sky with 1.6 trillion, 116 times that of 1973. With the development of Korea’s downstream industries, the country’s economy advanced — so did POSCO.

As POSCO runs towards the next billion, POSCO’s unwavering support for Korea’s key industries and the global community will continue.

Even for POSCO, who received the World Economic Forum recognition as a “lighthouse factory” for its innovative leadership in manufacturing, the 5G network is a new daunting challenge ⁠— but it’s also an opportunity. How?

Asian Steel Watch, the biannual English journal specialized in the Asian steel industry, can provide key insights. ASW vol. 7 addresses central issues surrounding the rise of the 5G network and how the steel industry can create a competitive advantage amid this new technology development. POSCO Newsroom presents Asian Steel Watch, “Shifting Needs for Steel Materials with the Rise of 5G Telecommunications and Smart Cities.”

On April 3, 2019, former Olympic figure skating champion Yuna Kim became the world’s first 5G subscriber. If we consider history to be about the conquest of materials by human beings, the advent of 5G technology heralds an era in which humans finally transcend time. We can now overcome any lag in the receipt or transmission of information anywhere around the world. 5G networks are not yet fully operational, and the effects of 5G technology are still being realized, but it will not take much longer before subscribers are enjoying full-fledged 5G services.

On June 27, 2018 when South Korea and Germany faced off in a World Cup match in Russia, shouts rose up in Seoul four times due to the time lag: Those watching on TV first cried out in triumph with the two Korean goals, followed quickly by those watching via the internet. In fact, those cheering in Seoul, whether through TV or the internet, saw the goal slightly later than those watched at the stadium in Russia. Such time lags will vanish with the advent of 5G telecommunications. Humans can finally transcend time.

Is it too much to say that a time lag might result in errors in industrial fields? When autonomous robots detect an error and halt operations at a plant, there is a time lag before the signals detected by sensors can be processed and transmitted to the control unit. Arithmetic units and programs must be installed in equipment to address this issue, causing the size and cost of equipment to rise. When equipment is managed online using the cloud, the size and cost of the equipment required can be reduced significantly. Time matters in this case. If equipment can become quicker than human reaction time, this would be an important breakthrough.

Generally, the control center must be placed within a steel plant to allow it to control the process without a time delay. However, if signals can still be transmitted faster than human reactions, the control center does not have to be located within the steel plant itself. In fact, one control center could oversee several plants of the same type. What about meetings in the workplace?

These days many companies hold remote meetings. Although theoretically feasible, remote video conferencing can still become inconvenient when the transmission speed for video and sound cannot support a reasonable time delay. This issue can be addressed through 5G technology. With video conferencing, people might feel like they are talking to one another face-to-face without any time lag. If this can be combined with three-dimensional holographic imaging, it will feel like talking to a real person even if they are actually on the other side of the world.

The commercialization of 5G technology will bring rapid changes to people’s lives. The first might be an expansion of shared offices. As shared offices are now generally used only for specific businesses, the impact of shared offices has been relatively minimal. If large companies and public institutions install shared offices near residential areas serving their employees, shared offices could have a significant impact on society.

In major cities like Seoul, Tokyo, and Beijing, workers will no longer have to spend as much time on the road. They can go to shared offices near their homes and hold remote meetings through holographic communication with their headquarters. Today, it is common to share desks at a workplace. It will not take much time to transition from desk sharing to office sharing. People will enjoy greater business opportunities as they encounter people from different teams or companies. The declining number of commuters will reduce traffic volumes. Fine particulate matter, recently a hot-button issue in South Korea, can also be mitigated to some degree. Fewer people will buy cars as they perceive less need to own them. This is evidenced by the fact that car sales are slipping in New York, Tokyo, and other large cities. Even the number of drivers’ licenses being issued is falling. With the spread of 5G technology, autonomous cars will become ubiquitous and shared cars will emerge as a norm, transforming the landscape for the automotive industry.

Autonomous cars are already a future realized. Autonomous cars collect traffic information to find optimal routes and detect road risks by monitoring the movement of nearby cars with active sensors. Intelligent autonomous car technology will advance with the significant improvement in the speed of telecommunication to cloud servers responsible for processing information using big data. 5G technology will help complete the real-time intelligent driving control systems required for autonomous cars.

Autonomous cars are already a future realized. Autonomous cars collect traffic information to find optimal routes and detect road risks by monitoring the movement of nearby cars with active
sensors. Intelligent autonomous car technology will advance with the significant improvement in the speed of telecommunication to cloud servers responsible for processing information using big data. 5G technology will help complete the real-time intelligent driving control systems required for autonomous cars.

Changes over the upcoming years or decades will be more significant than those that occurred during the last century. People’s ways of life will alter. Such changes in society will disrupt the order of conventional production and consumption and result in a new order. This new arrangement will in turn generate new demand. The question is who will seize this opportunity first. In the materials industry, companies that take a preemptive approach to this new order will certainly take the lead.

On the other hand, the Korean Institute of Metals and Materials (KIM) has selected five future materials-related issues and suggested promising materials for development. Their five
issues are: adaptation to a ‘new climate regime’; preparation for a super-aged society; disaster prevention; continuous economic growth; and a hyper-connected society. KIM has proposed types of materials to suit these five issues: materials adaptable to climate change, wellness bio-materials, safe materials, sustainable materials, and smart materials. For the steel industry, future materials adaptable to climate change, safe materials, and sustainable materials will all rise in importance. The changes in society triggered by 5G technology are closely related to the construction of smart cities using the future materials.

l The Rise of Future Metropolitan Cities

Metropolitan cities are essentially comprised of business and residential districts. In the morning, people travel long distances from residential to business areas and reverse the trip every evening. Such long-distance
commuting will disappear if shared or co-working offices become commonplace near public transportation terminals. In Korea, numerous knowledge industry centers have already been established near subway transfer stations to be used as shared offices. People could go to shared offices in the suburbs near their homes, creating new business opportunities through interaction with people from other companies. Unlike in the past when people worked with the same group of persons in the same office, they can encounter others from diverse fields of business, helping them become more creative. Time once spent on commuting can instead be used for self-development and leisure. Sports and entertainment facilities, including theaters, indoor sports centers, and tennis courts, will expand, and small businesses will flourish as they serve community residents. Such towns will require different types of buildings, and reconstruction projects refurbishing old town centers will gain ground. Once again, steel will present itself as the most suitable material for construction to proactively adapt to a rapidly changing society. The mandatory 52-hour workweek, rising labor costs, and burdensome environmental restrictions in the construction field will provide steel an opportunity to regain the position as the favored construction materials that it lost to concrete. In Great Britain, where steel is widely used for building, it is easy to procure steel components for construction. However, this industrial structure is less mature in Korea and other Asian countries where concrete buildings can easily be built due to low labor costs. This is one of the main reasons why it is essential to develop new steel construction materials in various types. Moreover, the steel industry should carefully consider how to inform consumers about the advantages of steel as a construction material: providing safety and convenience with resistance to Kim Nan-do, ‘Trend Korea 2019’ both natural (typhoons, earthquakes, tsunamis, etc.) and human-caused disasters (war, terrorism attacks, fires).

l Establishment of New Logistics Systems

Although human mobility may decline, the volume of cargo transport is projected to increase. The flourishing of e-commerce businesses such as Amazon has ensured that the logistics industry will become one of the most important industries in the future. SoftBank Chairman Masayoshi Son, who has gained remarkable returns from his investment in the Chinese web retailer Alibaba, has recently invested in Korea’s e-commerce firm Coupang, underlining the importance of the e-commerce field. To suit the rise in both dual-income and single-person households in Korea, even fresh products can be now delivered to homes. For rapid delivery of major volumes of fresh vegetables, fruit, and dairy products, it is necessary to develop new kinds of transportation systems that connect farms and cities. What is important here is how we can improve energy efficiency and reduce fine particulate pollution in a future where massive logistics becomes the norm.

The best way to improve energy efficiency is to reduce the weight of the given transport mode. Materials development in transportation, including cars, trains, ships, and airplanes as well as
drones, is primarily focused on weight reduction as a means to improve energy efficiency. Steel has long been advantageous compared to other materials, but it is being challenged by other lightweight materials. Especially for the automotive industry, improved fuel economy has become a pressing issue under increasingly strict environmental standards. The US government plans to require US vehicles to achieve fuel economy of 23.9 km/l by 2025, while Europe and Japan have set fuel economy targets of 26.5 km/l and 20.3 km/l, respectively, by 2020. Korea also plans to meet the fuel economy target of 24.3 km/l by 2020. This means that the automotive industry must improve fuel economy by more than 50% on average by 2025.

The steel industry is preparing for this situation by developing next-generation automotive steel. One example is high-strength Fe-Mn-Al-C lightweight steel, which is made over 10% lighter than conventional Fe-Mn-C steel through the addition of 5-10% aluminum content, and thereby becoming more competitive than aluminum on its own. Lightweight steel commonly has a disadvantage of having less than 1 GPa grade tensile strength. In order to overcome this, precipitation hardening martensite steel is being developed, and analysis is underway on the utilization of retained austenite. Aluminum is one of the fastest growing materials for use in vehicles, and carbon fiber reinforced composites and titanium are increasingly being applied as aerospace materials. Steel is used for aircraft landing gear, but the scope of application of steel is falling. To reduce the weight of high-speed trains, the share of the steel frame in railway rolling stock is declining and high-strength aluminum extrusion alloys and aluminum plate are on the rise in lightweight frames. Recently, extensive research is being conducted for saving weight in frames and internal materials using ignition-proof magnesium alloy. The TGV Duplex is the first high-speed train using AZ91 magnesium alloy for seat components, and it has reduced body weight by 16.7% compared to conventional aluminum alloys. Korea’s highspeed train KTX also uses magnesium alloy for seat components to achieve a weight reduction of up to 35.6%. In the shipbuilding industry, steel is increasingly being replaced by corrosion-resistant aluminum alloys in both high speed and leisure vessels. For the logistics industry, when the cost of energy for transporting a certain volume of cargo exceeds the cost of the materials in the transport, a wider range of choices of materials will be available. Under these changing trends, aluminum, magnesium, and titanium had growth rates of 9.2%, 8.0%, and 6.3%, respectively, in 2014, according to the market research firm, Markets and Markets.

In an effort to reduce fine particulates, transport modes that burn fossil fuels within cities may be edged out of the logistics industry. A so-called hyperloop, which is a future high-speed transportation concept first proposed by Elon Musk, could be used for long-distance travel while electric vehicles (EVs) or drones could be applied for short-distance travel and rapid delivery. Due to their considerable battery weight, weight reduction is an important issue for EVs. The steel industry is actively working to meet this need with advanced high strength steels (AHSS). Steel pipes seem to be the most suitable material to create a hyperloop for cargo transport. Although a hyperloop designed to carry passengers may require alternative materials to ensure psychological relief for passengers as they may feel
uncomfortable inside opaque steel tubes, steel is the most competitive option in terms of cost for a hyperloop for cargo transport. Eco-friendly container vessels or transcontinental trains can be used for transport of transnational and transcontinental cargo. The Korea Railroad Research Institute has recently developed foldable containers to improve logistics efficiency. These types of efforts will continue to become increasingly visible in various areas of logistics.

l Suitable Urban Systems

Older cities around the world share one thing in common: they have difficulty raising the massive funds required for urban regeneration. As buildings have a life cycle spanning more than 100 years, reconstruction costs are not generally included when calculating their construction costs, passing the buck down to future generations. As a result, major cities around the globe are experiencing fatigue. For a more sustainable urban system, regeneration costs must be considered from the start. Urban design should take the optimization of urban energy consumption and recycling into account. Steel is clearly the most competitive material for sustainable urban design. As nearly 80% of a steel house is recyclable, steel can be considered the base material most suitable for sustainable cities.2 If materials development puts its highest priority on energy reduction and resource circulation, the reduction of the weight of high strength steel can be a solution. POSCO A&C, a comprehensive architectural service company fully financed by POSCO, has recently developed modular housing and other structures, but the high price tag of the design in its early stages is keeping consumers at bay. The development of modular buildings would require a dramatic shift, for example, by adopting new steel materials such as printed color steel sheet. Such newly developed steel materials should be resistant to earthquakes, typhoons, and fires. Further technological advances should be pursued to address problems at a competitive price, including floor noise and thermal insulation.

▲ POSCO A&C website

l Needs for Innovation of Steel Materials

Historically, the advancement of scientific technologies has resulted in social transformations. It was only after the Industrial Revolution that workplaces became separated from places of residence. Apartments, the most common residential spaces in Korea, have been built to accommodate ballooning numbers of urban workers. The Industrial Revolution has brought profound changes to lifestyles that had been stable for centuries. In the First Industrial Revolution, steam engines created value through mass production. In the Second and Third Industrial Revolutions, the introduction of electricity and IT-based automation technology resulted in breakthroughs in production. Mass production cut costs and eventually expanded markets and increased sales. However, at the same time, it led to the reckless use of energy and resources, giving rise to several environmental and social issues. The Fourth Industrial Revolution, known for its data revolution, will also drive seismic changes in the lives of people with the advent of 5G telecommunications that can better apply the full value of data. Customized mass production is fundamentally addressing the issue of the resources wasted in mass production, while at the same time changing ways of life. The previous industrial revolutions separated work from places of residence, but the Fourth Industrial Revolution will return workspaces to residential areas. Perhaps the distant and even broken relations among families and neighbors can be restored. New communities can be created. Novel opportunities will arise for some of the sectors of society overlooked in the past. The issue is now a matter of who will react preemptively to these changes. Time is running out: A seismic change in society is just around the corner. The steel industry’s capacity to adapt to this change will be tested. The industrial revolutions of the past have transformed the lives of people, and those well prepared for such transformations have seized the opportunities they created.

* This article has been reproduced from Asian Steel Watch, a bi-annual English journal specialized in the Asian steel industry. The original version Vol. 7 (2019.08) can be accessed and downloaded directly from POSRI’s website here.

The ideas of “Smart Cities” are nothing new ⁠— they have been around for a while now as the future of urbanism. POSCO has been tapping this relatively uncharted territory through its vision for ‘Mega City.’ Still, crucial questions remain: what exactly are smart cities? And how would smart cities transform the landscape of the steel industry?

Asian Steel Watch, the biannual English journal specialized in the Asian steel industry, can provide insights into these questions. ASW vol. 7 features an in-depth study that addresses everything from the very definition of smart cities to how smart cities are helping to address urban issues and create new market opportunities. POSCO Newsroom reports:

l Why Smart Cities?

Urbanization has been progressing rapidly worldwide. The number of megacities with more than 10 million inhabitants is projected to rise from the 14 noted in 1995 to 46 by 2035. Increasing numbers of people are moving from rural to urban areas. The global share of the urban population is expected to rise to 62% by 2035, up from 45% in 1995.

Massive centralized cities are advantageous in terms of economic efficiency and effectiveness since production, consumption, education, and cultural development can all take place within a single area. For this reason, urbanization has been a natural response in many industrialized countries as a means to increase returns from investment and for sourcing talent. However, the rise of mega-cities and increasing population density have resulted in several threats to the quality of life of city dwellers.

Ironically, the industrial complexes, high-rise buildings, and transport infrastructure that were intended to increase public convenience have triggered several issues such as excessive energy consumption, environmental pollution, public insecurity, and income disparities. This in turn has threatened the quality of life of urban dwellers and diminished the sustainability of cities. Smart cities aim to address some of the issues stemming from rapid urbanization and high population density by using scientific and information technology to forge a more sustainable urban environment.

l Development of Smart Cities

The concept of smart cities emerged in the mid-1990s as the internet and information infrastructure became widespread. America Online (AOL) first suggested the concept of a smart city in which services are provided through a network. With the advent of the internet, telecommunications companies began offering new service models and testing pilot projects. The notion was given increasing attention when a series of smart city plans was formulated for megacities, including Amsterdam Digital City in 1993, Helsinki Arena 2000 in 1996, and Tokyo Smart City in 1998.

Smart cities began to spread during the 2000s when their commercial value was recognized. With the expanding popularity of the internet, various projects were planned in Europe and the US. Following the announcement of IBM’s Smarter Planet strategy, global companies including Cisco and Siemens actively entered the smart city field, which began to be regarded as an industry. In South Korea, the u-City concept was introduced in 2003. The Ubiquitous Cities Act was legislated in 2008 and applied to several new cities, including Hwasung and Dongtan.

After 2010, major Asian cities, including some in China and India, released hundreds of smart city plans and global smart city projects gained momentum. With the rise of the Fourth Industrial Revolution and related technologies such as AI, IoT, and big data, bold government policies and corporate innovations are on the rise, exemplified by Google’s Sidewalk Labs in Toronto and Alibaba’s City Brain model in Hangzhou. A smart city can be defined by its purpose or its means. So far, ‘smart city’ has been generally understood according to its purpose. As multiple definitions were released by diverse organizations and institutions, there has been some confusion surrounding the concept of a smart city. According to a report by the al Revolution and related technologies such as AI, IoT, and big data, bold government policies and corporate innovations are on the rise, exemplified by Google’s Sidewalk Labs in Toronto and Alibaba’s City Brain model in Hangzhou.

l What Is a Smart City?

A smart city can be defined by its purpose or its means. So far, ‘smart city’ has been generally understood according to its purpose. As multiple definitions were released by diverse organizations and institutions, there has been some confusion surrounding the concept of a smart city. According to a report by the International Telecommunication Union (ITU) in 2014, there were 116 definitions of a smart city. Five keywords can be extracted from these various definitions, however: 1) competitiveness; 2) intelligence and informatization; 3) eco-friendliness and sustainability; 4) quality of life of inhabitants; and 5) infrastructure and services. However, some argue that defining a smart city according to its purpose is not helpful for solving urban problems due to the differences in their social, cultural, and industrial backgrounds.

For this reason, a new concept of a ‘city as a platform’ has been gaining ground, meaning that cities should serve as a means or platform for troubleshooting. The concept of a ‘smart city as a means’ relates that customized solutions can be created to address urban issues economically and effectively by activating the upper layers of data and service in a structure consisting of infrastructure, data, and service layers, as seen in Figure 4. Many cities and local governments have selected low-cost and high-efficiency methods based on software and data to ensure sustainable city management. Through a smart city competition open to local residents, they collect ideas to address social issues, verify the outcomes of pilot projects, and spread them to other cities.

l Differences in Smart Cities by Region and Major Keywords

Smart city projects first emerged in advanced nations, including in North America and Europe, but are now rapidly spreading to developing nations. The goals and implementation schemes for smart cities vary by region. Developing nations build infrastructure and new cities using massive infusions of public funds for the purpose of the urban development required for establishing industrial infrastructure and achieving economic growth. In contrast, advanced nations generally aim to address urban issues through ICT, including IoT and big data, by making existing infrastructure intelligent and pursuing technological innovation and open data.

There is one common keyword shared by all types of smart city projects: energy efficiency. Energy efficiency accounts for 36% of stated goals and new urban development accounts for 19% of the goals of smart city projects currently underway across major cities. Energy efficiency is relevant in both advanced and developing countries, while new urban development is generally considered a priority in developing countries.

In the EU and North America, the key agenda is the shift to a low-carbon economy that can help to address climate change. The related goals include making cities more energy efficient and addressing urban issues through innovative technologies and open data. Ideas for solving urban problems have been collected through smart city competitions sponsored by public-private partnerships or with private funds. Pilot projects can be verified through living labs and the outcomes gradually applied. Projects are generally conducted by local governments while central governments provide R&D resources for technological innovation.

However, Asian countries with lower levels of industrialization than advanced countries generally pursue new urban development projects. These projects are commonly large-scale projects to build industrial complexes and fuel urban development while supplementing insufficient resources. Rather than the mitigation of climate change being pursued in the EU and North America, Asian projects are mainly focused on industrial infrastructure to enhance urban competitiveness and bolster the local economy. These urban development projects are led by local governments in collaboration with foreign governments and corporations in an effort to attract foreign investment and technology transfers.

Just like in the cases from the EU and North America, Latin American projects are pursuing energy efficiency, innovative technology, and open data to resolve urban issues. This stems from their early westernization leading to an urban structure where more than 80% of people live in cities. The smart city agenda for these countries consequently includes addressing the heavy concentration of people into large cities and the resulting issues such as public insecurity, traffic jams, and obsolete infrastructure. Diverse smart city projects are underway in Latin America, including in Brazil and Mexico.

l Smart City Policies and Implementation by Country

Many countries and local governments are implementing a variety of support measures for smart cities in an effort to boost competitiveness and improve the quality of life of urban dwellers. India and China are encouraging smart city projects as a means to refurbish national infrastructure and enhance urban competitiveness.

[The diverse efforts being made to support smart cities will change people’s lives, the type of industries, and the value chains for related industries. The source of added value is shifting from hardware to software under this transformation.

[As business models rapidly evolve with the rise of smart cities, the steel industry must think seriously about how the future will be unfold.]

In 2015, the government of India announced its Smart Cities Mission budgeted at INR 480 billion, which aims to develop 100 smart cities through 2022: establishing nine satellite cities with populations of over 4 million; turning 44 cities with populations of 1 to 4 million into smart cities; and establishing 20 small cities with populations less than 1 million. By connecting this mission to the country’s industrial master plan, India is endeavoring to improve industrial competitiveness and sophisticate its infrastructure.

The Chinese central government has been implementing massive smart city projects since 2013. Under the 12th Five-Year Economic Development Plan (2011-2015), the central government announced its intention to invest RMB 300 billion in establishing 320 smart cities by 2015 in the first phase of the project. Ninety pilot cities were selected in January 2013 and 103 more in August 2013. It expanded the existing smart city plan by 2017 with a combined investment reaching RMB 2 trillion in 2025. It is worth noting that China’s smart city projects are not simply about the sophistication of urban infrastructure. They also aim to increase the share of application and utilization of new technologies, including big data, IoT, and cloud computing in connection with the ‘Internet Plus’ strategy.

South Korea is also working on smart city projects through public-private collaborations. Recognizing smart cities as one of the enablers of the Fourth Industrial Revolution, the country has created a Special Subcommittee on Smart Cities under the Presidential Committee on the Fourth Industrial Revolution. In 2018, the Act on the Promotion of Smart City Development and Industry was legislated to support the industrialization of smart cities. Busan and Sejong City were selected as pilot cities for new technologies in autonomous cars, renewable energy, and block chains, as well as to provide incubators for new services.

Meanwhile, US and EU smart city projects are being led by local governments rather than central institutions. Central governments there fund a variety of R&D projects to develop and apply innovative technologies for the realization of smart cities, while local governments select prospective smart cities and formulate relevant strategies. The EU set up the European Innovation Partnership on Smart Cities and Communities (EIPECC) in 2011 in an effort to spread the smart city concept across Europe. In 2013, it announced strategic plans for implementing smart city projects and funded 350 projects conducted by 2,500 partners from the EU-32. In the US, the Obama administration released the US Smart Cities Initiative in 2015 with funding of USD 160 million for R&D projects on 25 new energy and environmental technologies.

As illustrated in the cases of these countries, smart city projects have been implemented in a variety of manners suited to the respective countries’ social and cultural backgrounds and level of industrial development. Both the perception and role of smart cities are rapidly changing, too. Their role is expanding from being simply a means to improve the convenience of citizens to providing a test bed that inspires the emergence of new and disruptive business models.

Both the central government-led smart city projects in South Korea, China, and Singapore and the local government-led projects in the USA, Canada, and Germany are designed to promote the emergence of experimental services based on the Fourth Industrial Revolution, such as AI, AR/VR, blockchain, and IoT, and entail complex policy requirements for technological development, start-ups, and job creation. This means that these projects are not just being managed by teams focused on urban infrastructure, but by diverse teams specialized in technology, industry, and human resources, as well as by councils featuring representatives of civic, academic, and research institute perspectives.

l Development Direction of and Market Opportunities for Smart Cities

Smart cities originated in the digital cities that emerged with the rise of the internet in the 1990s. After a lengthy discussion of smart cities over the last two decades, diverse projects are underway across the globe.

However, these efforts are mostly one-time projects for the purpose of overseeing urban infrastructure more efficiently and improving the management of disasters, safety, parks, and traffic. Such projects have been operated as silos with independent functions: the public sector places orders, companies take the orders and build systems, and citizens make use of the resulting services.

In contrast, recent projects have been implemented through alliances featuring citizens, research institutes, and corporations aiming to create a service model that ensures continuous evolution and development. A black-or-white approach in which the public sector must become the providers of services and the citizens become the receivers must be avoided. Instead, the public sector should participate in creating a platform-based ecosystem and serve as mediators that coordinate any conflicts of interests. They should also operate as facilitators in an ecosystem that utilizes public funds to encourage citizens to undertake challenges and assist in the creation of new business models. Through these experiments, many companies will continue to develop business models and enrich the ecosystem.

This evolution entails a shift in market opportunities in smart cities.

From the perspective of traditional industry, market opportunities in smart cities lie in the construction of urban infrastructure, such as urban development and base infrastructure projects. In terms of market size, public infrastructure, industrial complexes, and residential buildings still account for the lion’s share of the construction market.

It is now time to move on from hardware and take a fresh new approach to emerging opportunities. In the automotive industry, various experiments are being tested, resulting in new business models for electric and autonomous cars. In addition, the energy industry is transforming itself from a massive processing industry into a platform industry with distributed generation.

Future cities will not remain merely an aggregate of hardware comprised of concrete and steel, but a fusion of new and disruptive service models based on infrastructure. In coming years, value will be created not by hardware, but by the software within it. This is also true for the construction and steel industries. Selling buildings or steel is not enough to seize the major opportunities within the smart city market. Related changes are underway. The construction industry is shifting its business model from the one-time construction of infrastructure to its operation and management. When combined with AI, IoT, and other emerging technologies, this will be expanded to more diverse fields and formats.

The steel industry is in the same boat. E-commerce took off just a few years ago, but it is now taking over. Such a change goes beyond the expansion of offline transactions into online distribution channels. Taking into account the characteristics of e-commerce platforms on which various stakeholders interact, steel e-commerce will be developed from steel transactions into a new business model blending finance, logistics, and other manufacturing. This transformation will be connected to the new services and markets sparked by smart cities, eventually expanding the field for the steel industry.

Smart cities are the future of industry. The diverse efforts being made to support smart cities will change people’s lives, the type of industries, and the value chains for related industries. The source of added value is shifting from hardware to software under this transformation. As business models rapidly evolve with the rise of smart cities, the steel industry must think seriously about how the future will unfold.

* This article has been reproduced from Asian Steel Watch, a bi-annual English journal specialized in the Asian steel industry. The original version Vol. 7 (2019.08) can be accessed and downloaded directly from POSRI’s website here.

For several years, the steel industry has taken measures to eliminate these issues, and the effort is ongoing. What are some of the key issues surrounding the industry’s air quality management? POSCO Newsroom presents worldsteel, “Air Quality Management.”

The steel industry recognises the importance of the issues surrounding emissions to air and their impact on ambient air quality, human health and the environment.

For decades, the steel industry has taken measures to address these issues, thereby significantly and demonstrably reducing emissions per tonne of steel.

▲ worldsteel.org – Source: UNECE Convention on long-range transboundary air pollution

Steel, whether produced via the integrated, direct reduced iron or electric arc furnace route, requires the transport, storage, handling, heating and transformation of raw materials.

All these processes have the potential to generate emissions to air *, primarily in the form of dust (or particulate matter (PM), sulphur dioxide (SO2), and nitrous oxides (NOx). Other emissions generated in small quantities include dioxins and heavy metals, typically attached to dust particles.

Today, all steel plants are subject to environmental regulation, which set requirements to restrict emissions to air. This regulatory framework is translated into an environmental permit (or licence to operate), which establishes plant-specific Emission Limit Values (ELVs) covering the primary emissions to air, dust, SO2, and NOx, and in most cases other
emissions.

The environmental permit also sets monitoring requirements and it is common for steel plants to have additional requirements within the permit, such as maximum production capacity, emission ceilings for specific emissions, taxes or fees on emissions or specific reduction targets.

l Emissions from Stacks versus Diffuse and Fugitive Sources

Stack emissions are released at height from identifiable sources (point sources) and are dispersed in the atmosphere. Diffuse and fugitive emissions (non-point sources), contrary to stack emissions, originate from an area, such as a stockpile or a road.

Stack emissions are managed using a variety of controls, such as beneficiation (i.e. removing potential contaminants before further processing), yield/process optimisation (‘more with less’), combustion control, abatement technologies (i.e. bag filters, electrostatic precipitators (ESPs), wet scrubbing systems, activated carbon adsorbers, cyclones, mist eliminators, etc.), source monitoring, incident investigation, plant inspections, source modelling and targeted plant maintenance regimes.

Stack emissions from the steel industry are managed to be well below prescribed ELVs. Exceedances are infrequent and occur in most cases during process disturbances. In these cases, authorities are informed and investigations carried out to identify the root cause, prevent recurrence and drive continuous improvement.

Emissions from iron and steelmaking operations, including cast house floor emissions from blast furnaces, are controlled via secondary dedusting systems (i.e. bag filters, wet scrubbers, ESPs, etc.) with a collection point inside the building. Occasionally, for safety reasons, the flaring of process gases is required. In this case the gases will have been filtered beforehand.

Diffuse emissions are mainly associated with material handling, stockpiling and transport activities. A variety of controls are used to manage potential emissions from these activities, such as minimising volumes of material stored, stockpile design, watering of stockpiles and roads, application of surface sealants, use of enclosures for bulk material storage, paving and sweeping of roads, dedusting of transport belts or use of closed belts, windbreaks/vegetation and video surveillance.

In addition to these measures, several tools are used to proactively manage emissions, such as weather alert systems, ambient monitoring, plant inspections/audits and risk/incident management systems.

Fugitive emissions, such as emissions generated from the roof of some buildings or emissions escaping from valves and evaporation of solvents are typically controlled and managed through maintenance and monitoring.

Diffuse and fugitive emissions are commonly regulated through the application of regional ambient air quality standards, which are based on an assessment of modelled or potential impact on the ambient air quality at selected ambient monitoring locations in the neighbouring area.

l Regulatory Framework

An environmental permit is a requirement for the operation of a steel plant. The permit is based on an assessment of the environmental impacts of
activities and most permits set ELVs in addition to defining monitoring and reporting requirements.

Environmental permits are typically reviewed periodically, or in case of production increase, construction of new facilities, new/revised environmental standards, or when new substances are identified.

• Environmental permits and ELVs must be based on sound science with respect to the potential risk to human health and the environment, and they need to be achievable.
• Environmental permits should never prescribe the use of a specific technology but should allow requirements to be met with a technology/practice of choice. To guarantee the smooth operation of the plant and the optimal protection of the environment, the permitting process must ensure legal and planning certainty.

l Holistic Environmental Assessment

Advanced abatement technologies require energy and other operational supplies to provide effective emission control. For example, wet dedusting technology requires significant amounts of water and electricity as well as chemical additives. To ensure an optimal environmental outcome, it is necessary to consider the impact of the prospective air emission abatement control technology on other environmental aspects (i.e. water pollution, waste generation/treatment requirements, energy requirements and greenhouse gas emissions), commonly known as the cross-media effects.

• When considering a suitable abatement technology for a specific emission source or production process, it is essential to take a holistic approach to the potential environmental impacts and consider the overall sustainability of the technology.

l Application of Emission Reduction Technologies

Every steel plant is unique, for example, in relation to geographic location, the proximity of sensitive receivers, the scale of operation and production processes. Therefore, a robust environmental risk assessment, including analysis of potential cross-media effects, is essential to ensure that identified emission reduction technologies are fit for purpose and sustainable for application at a specific steel plant.

Technical considerations should contemplate aspects such as the applicability to new and/or existing plants, specific operating conditions and types of raw materials and fuels.

• Since every steel plant is unique, it is essential to assess and ensure that identified emission reduction technologies are fit for purpose and sustainable for each application.

Stack emissions from power generation, industrial processes and the steel industry contribute to general background levels of air pollutants and form part of a larger set of physical agents found in the atmosphere. Emissions from natural sources such as forest fires, soil, pollen and sea spray also make up a large part of the background levels.

• Reducing emission generation from point sources improves regional air quality.

Diffuse and fugitive emissions, particularly dust emissions, are typically emitted close to ground level, and as such predominantly contribute to local air quality and tend to raise visual amenity issues.

Other emission sources impacting on local air quality include road traffic, transport, domestic heating, construction and demolition, bulk material handling and agriculture.

• Effective control of emissions closer to ground level drive improvements in local air quality.

l Monitoring of Air Emissions

The steel industry conducts extensive air emissions monitoring to follow up on permit requirements and identify opportunities for continuous improvement.

Monitoring in a typical steel facility includes source monitoring of emissions to identify potential sources of dust, NOx, SO2, and heavy metals. This monitoring combines extractive testing and continuous or online monitoring and reporting to the authorities.

Many steel plants also maintain, or support, broader ambient monitoring networks on the perimeter of the facility or in the neighbouring community of total suspended particles (TSPs), PM10, PM2.5, NOx, SO2 and sometimes heavy metals. Other types of monitoring include deposition monitoring and biomonitoring.

In addition, most steel plants have invested in air quality modelling and other established management activities such as targeted audits/inspections, video surveillance, environmental readiness and community hotlines.

These management practices are designed to determine the steel industry’s ambient air quality contribution, assist in identifying the sources of emissions and drive improvement.

l Health and Environmental Effects

Air pollution has recognised environmental and health effects. Air quality standards are therefore established to prevent, reduce or avoid adverse impacts on human health and the environment.

Through the application of advanced abatement technologies, comprehensive management practices and a drive for continuous improvement, the industry aims to minimise emissions to air and thereby their impact.

• The steel industry engages proactively and constructively with permitting authorities and its stakeholders to respond to emerging health and environmental issues.

l Going Forward, What Are Our Key Focus Areas?

Diffuse dust (dust from material handling, stockpiling and transport activities) is the most visible particulate matter generated by the steel industry. While significant technology and management improvements have been made in the past decades, managing diffuse dust remains a challenge.

Because steel plants are often surrounded by residential areas, either for historical reasons or due to growing rapid urbanisation, the steel industry needs to further engage with local communities to discuss any concerns they may have, leading to an ongoing partnership.

Another area of critical importance is the further refining of sophisticated air quality modelling systems (dispersion modelling), which can determine the share of steel industry activities on ambient air quality and demonstrate improvement over time.

* Emissions to air have the particularity of having a local or regional reach as opposed to CO2 emissions, which have a global impact, and are therefore not covered in this report.

The full length of the worldsteel’s position paper, “Air Quality Management” can be downloaded here.

l This Is Smart Steelworks

As addressed in the POSCO the Lighthouse Factory #1, a smart steelworks collects and standardizes all factory data via PosFrame; then, the PosFrame self-learns the data to provide optimal process conditions and controls the various operations at steelworks.

The smart process minimizes the occasions for heuristic decisions preventing human errors. Objective and accurate data can lead to a eureka moment where innovative solutions are discovered. Wait, does this mean human labors are now dispensable?

Such hasty assumption is a surefire way to creating unnecessary anxiety. What the smart technology does is to let the workers delegate simple repetitive tasks to the machine, instead channeling their sophisticated skills and mental energy into perfecting the steelworks operation. The workers feed the result back into the PosFrame fostering the ultimate synergy between technology and humans.

How did smart technology transform the steelmaking operations at steelworks? Let’s find out.

[Order process] Small Lot Orders Go Smart

POSCO’s Order Management Group handles the planning for the entire steel production. One of their crucial tasks includes processing small lot orders — the order quantity for these small lot orders is too small that they typically do not meet a steelworks’ minimum production volume requirements.

Before smarticization, workers manually analyzed and processed the small lot orders — from checking the small lot order standards to figuring out whether and how to bulk-process chunks of small lot orders. The workers manually set the standards and modified them every half-year, the worst-case scenario being small orders sometimes ended up buried and left out. Some urgent orders were constantly classified as ‘small lot’ orders never receiving greenlight for production. In such cases, the order setting had to be reset so it can be incorporated with other orders. This used to take almost six hours or more. The average time for processing the entire small lot order is about 12 hours.

With ‘Smart Task,’ AI automatically organizes small lot orders — based on the analysis of all previous data, the system derives 12 factors impacting small lot orders. The AI also self-learns, so it can self-evaluate the orders. The processing accuracy is currently at 97%. To minimize production costs, the system also predicts the planning volumes so that small lot orders can be integrated with other orders — the production accuracy for which is at 99.99%. Compared to the previous 12 hours, the new procedure takes only an hour.

[Ironmaking] POSCO’s Smart Ironmaking Becomes the National Core Technology

The Smart Task comprehensively controls multiple factors such as furnace ventilation, combustibility, molten iron temperature, etc.; whereas, in the past, all of these were left to manual labor.
For the smooth operation of the Smart Task, the ironmaking department at Pohang Steelworks first defined variables that impact the furnace condition and subsequently integrated various information. In technical terms, this process is called ‘standardizing data.’

Under the Smart Task system, various indicators that were previously subject to the workers’ heuristic knowledge have been organized automating the manual processes. Now, the temperature of molten iron becomes data through IoT, and high-definition cameras conduct regular check-ups on raw materials and fuels.

POSCO started accelerating the establishment of an auto-control system in 2017. Through deep learning, AI self-learns, predicts and manages the data. Beyond simple automation of the current tasks, the system predicts and controls the potential variables and derives optimal results.

Even if the current furnace condition is satisfactory, the smart system goes above and beyond to make sure the furnace maintains its optimal condition. The Pohang No.2 blast furnace became a testing ground for the automated smart technology for the first time in Korea upping the daily molten iron production by 240 tons. The smart technology applied to the Pohang No.2 blast furnace received the government designation as the National Core Technology in July this year.

[Steelmaking] POSCO Goes PTX: Posco sTeelmaking eXpress!

The extremely high temperature required for steelmaking operation makes it difficult to measure temperature in real-time, which was why the daily operation was entirely dependent on field workers’ heuristic knowledge. Variations and human errors were inevitable in this system. Abnormalities at stages required not only a full-stop of the procedure directly involved — but also the procedures before and after.

The steelmaking Plant 2 at Pohang Steelworks has developed an integrated control system — it controls the timing, temperature, and the ingredients from the converter to the continuous casting process. There are potentially 125,000 probable procedures involved in the production for any given steel product.

POSCO digitized and standardized these procedures completing the PTX system by July 2018. With PTX, continuous processing became a reality — from converter through continuous casting without temporary halts or delays. Live-assessment of estimated arrival time, temperature, and product components also became available.

Before PTX, the temperature accuracy was at 80%, but now the system predicts the temperature with 90% accuracy. The use of raw materials also became more efficient.

[Continuous Casting] Prediction Made Simpler and Faster, Saves 600 million

Quality control is absolutely crucial, but it’s impossible to go through each and every material with a fine-tooth comb. So the typical inspection involved a through, 100% surface inspection of sample materials. If and when any abnormalities were detected in the particular sample, all other materials produced in the same batch had to be retrieved, subsequently undergoing thorough inspections.

The Pohang Steelworks No.2 and No.4 continuous casting plants annually inspected 340,000 tons of sample materials — only 30,000 tons found to be defective.

With a relatively small amount of defective materials, POSCO strove to minimize the time wasted, and to maximize the company’s resources. By applying artificial intelligence, POSCO collected a vast amount of data on steelmaking and continuous casting processes thereby establishing a model to predict defects. This was done by creating criteria of what constitutes as abnormalities in quality. Since the adoption of the new system in March 2018, the system now only screens defective materials, eliminating unnecessary testings. Furthermore, it pinpoints the reasons for the defect — the new system is expected to save over 600 million KRW every year.

[Rolling] AI Analyzes and Auto-controls Flatness Factors

Thick plate products first undergo the slab-heating process subsequently going through two rolling procedures. After that, according to the customer’s requirements, it undergoes an accelerated cooling process called Thermo-Mechanical Control Process (TMCP). TMCP involves spraying high-speed water on a steel plate rapidly cooling it to a designated temperature to improve the strength and the welding capacity of steel products. The process requires special equipment — and the water-spraying technology is highly advanced. Without accurate maneuver, the flatness of a steel product can be compromised.

In the past, the flatness of thick plates was manually analyzed, twice — once when the plate was hot (hot flatness) after TMCP treatment; and again, when the plate cooled down (cold flatness) during the shearing process. Measuring flatness in such a manner was extremely time-consuming, and it often caused a functional overload — it was challenging for the factory engineers to control the TMCP by manually inputting the results one at a time.

The plate plant at Gwangyang Steelworks created a learning model by analyzing the influential factors for hot and cold flatness — ultimately the company figured out the conditions that can achieve the most optimal flatness. Now, the engineers can simply monitor the optimal working condition values produced by AI supervising the smooth operations of each process. The correction needs for the products during the post-TMCP process are now reduced to 50% which saves about 1.3 billion KRW annually.

[Surface Treatment] Another National Core Technology, POSCO Surface Treatment Goes AI.

Continuous Galvanizing Line (CGL) involves processing cold-rolled coils with continuous heat treatment, putting them in zinc pot, ultimately producing galvanized iron plates. POSCO’s Giga Steel is also produced through CGL process.

After plates are taken out the zinc pot, an air knife controls the coating amount by cutting out zinc before it solidifies on the surface. The target coating weight varies for each product, and the coating weight could be measured only after the air knife procedure and solidification completed. This is why the live-control of coating weight remained challenging.

To address the challenge, POSCO developed AI-based control model for coating weight — it uses deep learning for precise management of such factors as steel grade, plate thickness, width, operating conditions, and target coating weight. Previously, the accuracy rate for predicting coating weight was projected at 89% — now, with 99% accuracy, the technology has been applied to all surface treatment plants at both Pohang and Gwangyang Steelworks. Just as POSCO’s smart ironmaking technology, POSCO’s smart surface treatment technology also received government designation as National Core Technology.

l Smart Steelworks Enhances Safety

A truly smart steelworks operation prioritizes workers’ safety as well as the environment. POSCO is no exception. What makes POSCO exceptional in this domain, especially when it comes to its application of smart technology, is the way the company utilizes smart CCTVs. POSCO developed a smart CCTV system — unlike general CCTVs which simply record video footage, POSCO’s smart CCTV auto-detects patterns and movements at production facilities. When the system recognizes any abnormalities, it promptly alerts the administrator in charge.

POSCO developed an optimized smart CCTV system that meets various demands of steelworks operations by integrating previously accumulated footages. From last year, POSCO began installing the smart CCTVs at Gwangyang No. 3 surface treatment plant, No.2 steelmaking plant, No.1 coke plant, and Pohang No. 2 plate plant.

Smart CCTVs automatically recognizes and analyzes various information such as the product quality and safety information, reducing the amount of time workers merely ‘stand by’ just to check all the information manually. At a steelmaking plant, for example, smart cameras can measure the temperature of molten iron. At a surface treatment plant, the smart camera detects the subtle color difference of coil-ends allowing prompt response for potential quality defects.

Furthermore, multiple imaging devices, such as thermal imaging cameras, can proactively detect and prevent fire hazards. At all corners of POSCO steelworks, smart CCTVs gather information and identify potential hazards before anybody does.

POSCO’s smart steelworks is an ongoing project. With the establishment of smart technology, POSCO will continue to address the challenges remain unsolved — POSCO aspires to complete the smartization process to ensure production efficiency, top quality products and improved safety.

POSCO is the first South Korean company to receive such recognition. Through its smart-factory platform, the company demonstrated its ability to leverage artificial intelligence to drive productivity and quality improvements in the steel industry.

How does POSCO drive impact by applying Fourth Industrial Revolution technologies? POSCO Newsroom reports.

l POSCO the Lighthouse Factory Shines Light on Manufacturing Industry

Lighthouse factories represent a range of industries that demonstrate leadership in applying Fourth Industrial Revolution technologies like IoT, cloud computing, Big Data, and AI, to drive financial and operational impact.
For the last five years, POSCO has laid the groundwork for the smart factory to boost its competitiveness in steelmaking. POSCO’s selection signifies global recognition of the company’s such effort.
From the submission of the application, due diligence, to documentation review by WEF consultant, the lighthouse factory selection is an arduous process. From the initial application submission, it took POSCO about one year until its final selection as the lighthouse factory.

One of POSCO’s esteemed contributions was its establishment of a sound ecosystem where SMEs and start-ups can thrive through active collaboration. Additionally, POSCO’s smart factory platform was customized to meet the needs of the steel industry. One of the WEF consultants at POSCO’s steelworks was especially impressed with the way in which years of human skills paired superbly with the new AI technology in monitor-controlling the massive furnace operations live, 24/7.

There are altogether 26 lighthouse factories around the world including POSCO, Siemens, BMW, Johnson & Jonson, and Haier. The lighthouse designation effectively gives the companies the Global Lighthouse Network membership among which the members share their knowledge and experiences enhancing their ability to better-adopt smart-factory platform. POSCO plans to utilize the benefits the Network offers to boost its ability to establish and advance smart factories that meet ever-changing industry demands.

l Sophisticated Steelmaking Goes ‘Smart’

Heavy pole and massive chimneys are some of the things that people associate with typical steelworks operation. What’s so complicated about steelmaking? — isn’t it all about stuffing everything in the blast furnace where molten iron comes out? Then molding the molten iron, baking it, pressing it, and cutting it up?

Maybe so, but in actuality, each process is extremely sophisticated especially when combined with varying customer requests. The smooth operation of POSCO’s 24/7 steelworks can be attributed to the company’s 51 years of experience as well as to the field engineers whose meticulous monitoring and management of the steelworks operation propel the steelworks operation forward.

Even with their expertise, however, each engineer’s experience varies. In the immense intricacy of steelworks operation, POSCO must deal with the inevitable at all times. What are some of the inevitable situations that can occur during the steelmaking process?

Production Planning: POSCO’s ‘Order Management Group’ is the brain of all steelworks operation — not only does it take orders, but it also manages production schedules, locations, and production methods. The Group is also in charge of figuring out precise production timing as per special customer requirements. Some customer requests involve a unique mixture of ingredients, so there are always many variables to consider. There are at least 10 ‘standard’ procedures the Order Processing Group must consider. Only after these minimum standards have been met, the steelworks operation of that specific order can receive greenlight.

Ironmaking: POSCO Newsroom previously covered the basic concept of managing ‘blast furnace condition’ in the ‘Blast Furnace Anatomy #1 — To the Heart of Steelworks Operation’ (LINK). There are countless tasks involved in 24/7 blast furnace operation — from maintaining temperature, placing in fuels and raw materials with precision, to predicting the amount of by-product gas generation.

Steelmaking & Continuous Casting: The steelmaking department removes impurities from the molten iron produced in the previous ironmaking stage, by way of converter — the molten iron becomes ‘steel’ in this process. During the casting process, the ‘steel’ is molded into intermediary materials like slab, bloom, and billet.

Molten iron can be made into countless different products to meet diverse customer needs, each requiring different portion and mixture of ingredients. To achieve this goal, the molten iron undergoes four different stages of ‘blowing process’ where oxygen is pressured through molten iron to lower the carbon content of the alloy, changing it into low-carbon steel.

At this point, the molten ‘steel’ goes through continuous casting, after of which is cooled down and cut. Temperature and ingredient management with precision is crucial for maximized use of limited resources.

Rolling: The next step is ‘tempering,’ a process of heat treating, which is used to increase the toughness of iron-based alloys. In ‘Game of Thrones’, blacksmiths constantly bang on the iron as a way of hardening the material. In steelworks, the process of rolling achieves the same goal.

In rolling, materials are passed through the rotating rolls to produce steel products that meet customer demands: in thickness, width, strength, durability, etc. Imagine baking bread, each with a different requirement for textures, tastes as well as shapes.

Surface Treatment: Automotive steel plates and home appliances are galvanized so that they become more corrosion-resistant, more suitable for various manufacturing purposes. Precise surface treatment suited to each purpose is the key to an advanced coating technology.

Notwithstanding the 100% effort aimed for perfection, complex steelmaking process overflows with information. Variation — be it human or mechanic — is inevitable in each and every step of the process. To address such variation, POSCO is opting for the smart factory, identifying it as the next-generation of its growth engine.

The establishment of smart factories must be preceded by the digitization of factories. Through Process Innovation Project (PI Project) in the 2000s, POSCO successfully achieved digitization of its factories. What set POSCO apart from the various similar endeavor is that the company has been working this digitization muscle for a while now. Smart factory, which is being built on the digital factory, is at the center of POSCO’s unique smart factory platform called PosFrame.

l PosFrame, the Foundation of POSCO’s Smart Factory

What is the origin of POSCO’s smart factory? It can be traced back to the year 2015 when the hype of smart industry hasn’t quite caught on the flame. Even back then, POSCO introduced new technologies like Big Data, specifically at the Plate Plant at Gwangyang Steelworks. At this point, Gwangyang became a testing ground for POSCO’s smart factory. During this process, the foundation for ‘PosFrame,’ POSCO’s unique smart platform, was created.

With PosFrame, POSCO could establish a system in which the company’s countless data and skills accumulated through the 51 years of its operation can be integrated and stored in one place.

How is this different from conventional digitization?

PosFrame is the world’s first smart factory platform specified for continuous manufacturing processes. The reason why ‘PosFrame’ is identified as a ‘platform’ is this: think of railway platforms. Railway platforms are where different types of trains pass through — be it bullet trains, express trains, or slower all-stop trains. A platform manages information about different types of trains — in this case, data — coming and going all the time. It’s a perfect system for 24/7 steelworks operation. The goal of PosFrame is to pinpoint the reason behind a product defect, if and when, by meticulously back-tracing the steelmaking process to figure out exactly where a variation might have occurred.

Furthermore, PosFrame goes beyond simple digitization. Whereas digitization simply stores information as data, PosFrame analyzes the data, enabling the development of automation models.
Here, a question might arise: isn’t automation something only reserved for experts? PosFrame’s ‘Workbench’ feature says no. Workbench is accessible to everyone. For example, field engineers can apply their expert knowledge and use the data to develop automation models so that the models can be utilized in various steelmaking processes. Thanks to the data collected and standardized by PosFrame, engineers can analyze information not only for the process they’re directly involved but also the processes that come before and after. PosFrame makes it easier for the engineers to tackle difficult issues that previously remained as random occurrences.

The incredibly accessible PosFrame accelerated POSCO’s advance into smart factories. Through PosFrame, all POSCO employees are turning into semi-AI experts.

To further its smartizaton process, POSCO has been providing smart tech training to all employees since 2017. The training is helping the employees take their skills to the next level towards establishing a more data-driven working environment.

Through the ‘POSCO the Lighthouse Factory #1,’ we introduced the core concepts behind POSCO’s smart factory. In the next episode, ‘POSCO the Lighthouse Factory #2: POSCO’s Smart Factory Transforms the Industry (The Cases),’ we will provide more concrete pictures on how POSCO’s smart factories operate. Stay tuned.

Now the ‘FE Odyssey: “I Am a ButterFEly.”’, the final installation of the Blast Anatomy series, will follow the iron (FE) through its journey – all the way from its birthplace in mine to its final destinations, right around us. Better yet, the FE itself will walk us through the entire adventure!

Like a majestic butterfly who muddles through arduous stages – eggs, caterpillars then pupa – the journey of steel is just as rigorous: from iron ore buried deep in the mines until it finally presents its true self, as steel.

Join now to follow the FE Odyssey. POSCO Newsroom presents: “Blast Furnace Anatomy #3 – FE Odyssey: “I Am a ButterFEly.”

l Into the World – Like a Butterfly Fighting Its Way out of the Egg,
Iron Ore Makes Its Way out of the Mine

▲ Roy Hill Mine, Western Australia

I was born in Roy Hill mine in Western Australia, over 6,500 kilometers away from Pohang where one of POSCO steelworks is located. While buried deep in the ground of Roy Hill, I always dreamed of transforming into cool and chic steel products – a sturdy car, a slick home electronics, or a shiny stainless travel mug that offers people warm beverages.

Roy Hill mine has a total of 2.3 billion tons of iron ore deposits. POSCO started investing in Roy Hill mining project since 2010 now holding 12.5% of its shares. Roy Hill boasts the annual production of 55 million tons of iron ores. It’s huge! And that’s how so many of my siblings come from there. Besides Roy Hill, my other iron ore siblings also come from places like Canada and Brazil.

From the mine, do I travel straight to steelworks? Not exactly. I wish it were that simple. Before I get transported to the port in Australia, I make a stop at a laboratory for thorough testing – all my internal organs undergo rigorous testing. Using magnets, the lab technicians classify ores with high iron (FE) content. Fortunately, the iron ore that housed me passed the inspection, and I headed to the harbor so I can be sent to Korea.

My siblings and I boarded the transport ships to Korea. After 15 days of a long journey across the ocean, I can hardly forget the excitement I felt when we finally docked. Here we were, at the pier for POSCO’s raw materials, and I was stepping closer to my dream. Every year, 55 million tons of iron ores reach the POSCO docks – both Pohang and Gwangyang combined! These iron ores all share one dream and one dream only – the dream of becoming steel.

After we disembarked from the ship, we got stacked in raw materials yard. The raw material yards at POSCO steelworks measure to be 1.85 million m² – both Pohang and Gwangyang combined.* In that vast field of POSCO yard, I met some new friends – some were called ‘coal.’ Later on, when we reunited in front of the blast furnace, the coal friends would stand before me already transformed as ‘coke.’ Because coal could produce acidic dust, they would first travel to a place called ‘silo,’ an eco-friendly storage facility specifically designated for them.

*The Seoul World Cup Park: 2.1 million m².

When I looked closely, I noticed my iron ore siblings all had very different body types. We were all jagged and uneven. So we got separated, tossed and rolled around a lot, so our bodies can be shaped just right for the furnace. It was a lot of work, but I was so psyched – I knew I would soon get to travel into the blast furnace!

l Rites of Passage for Butterflies, So for the Iron Ores

As it turns out, I knew nothing of what it took to become steel. From the raw materials yard, I thought I would head straight into the blast furnace. Little did I know that I had to undergo one last stage – a process called ‘sintering.’ I also went through several other processes and entered a hot oven. As I got baked in it, I got more polished and solid. It was 1,300℃, so it was super hot, but I heard it’d be even hotter inside a blast furnace, so I got through it okay. After sintering, I transformed into sinter, a raw material for steelmaking, not an ugly and unpolished iron ore anymore!

As sinter, I passed through three filters, and right in front of the rotation chute, I reunited with the friends I’ve met earlier at POSCO yard. We would enter the blast furnace together. Through the rotation chute, we twirled and rolled around, a lot.

I heard some of my friends didn’t quite make it to the rotation chute. They didn’t pass through the filtering stages earlier. But I heard they were going to be reused as raw materials for the sintering instead.
I entered the furnace as sinter, but there were other raw materials like ‘sized lump’ and ‘pellet’. The sized lump came in just the perfect size right from the extraction. Relatively small iron ores became pellets through compressing and molding. Subsidiary materials like limestones also entered the furnace with me. Of course, the crucial fuel friends like coke, who help us melt, also joined us.

Facing the blast furnace, I got so nervous, so I took a deep breath to calm myself down. Because the temperature inside the furnace could reach as high as 2,300℃, it was rather hard to breathe, but my coke friend and I patiently took turns forming layers inside the furnace. As time went on, we traveled down. As we traveled down, we could feel the hot air flying up. Along with the hot air, I flew up in the middle of the furnace. I wasn’t quite sure where I would go next. Meanwhile, I heard my coke friend shouting, “hot air slapping!”

The coke hot aired by 1,200℃ air from the bottom, was oxidized producing carbon monoxide as a result. In turn, this carbon monoxide took oxygen away from me. These series of chemical reactions separated me from oxygen, and I became pure iron, FE! I finally transformed into molten iron and dropped to the floor. Along with my siblings, I roared in victory and exited the furnace through the tap hole.

l How Molten Iron Becomes Steel

I became molten iron, but the excitement was short-lived. To become steel, I have yet to face another set of journeys. As is, right out of the furnace, I was called ‘pig iron’ still containing several impurities like carbon, phosphorus, and sulfur. I still had to go through several processes inside the steelworks to reborn as a slick and beautiful steel product. The processes to come were: steelmaking, casting and rolling.

POSCO’s Pohang and Gwangyang Steelworks are integrated steelworks – because they have all the facilities to turn something like me, a piece of iron ore rock, into perfect and complete steel – all in one place. Let me walk you through each step.

Step 01. Steelmaking process – removing impurities from molten iron, molten iron becomes molten steel at this stage.
To become steel, I still had to shed impurities completely, and my carbon proportion had to be adjusted also. As pig iron, I exited the furnace through the tap hole and got loaded onto the ‘Torpedo Ladle Car’ and transported to the converter.

At this stage, the steelworks workers called me ‘molten iron,’ which meant pig iron made in the blast furnace. The torpedo ladle car is a specially designed car that transports molten iron. Each car, which can load up to 300 tons of molten iron, heads to the converter. Once I got to the converter, I saw scrap metals as well as pure oxygen. The carbon inside me became oxidized, and its proportion was reduced down to 0.3%. At this stage, I became independent from all the unnecessary impurities. Through this steelmaking process, I became molten steel – pure and optimized pre-steel. I wasn’t yet complete but was a ‘steel’ nonetheless, finally!

Step 02. Casting process – where the liquidated steel becomes solid.
As molten steel, I went into a mold, and through the continuous casting process, I got cooled and solidified to become intermediary materials like slab, bloom, and billet. It’s like shaping cookie dough with cookie cutters of various shapes and sizes. Slabs are used for plates or hot rolled coil; blooms for large steel bars or wire rods; and billets are made into small steel bars or wire rods.

Step 03. Rolling process – making steel into plates or wire rods.
After casting, slab, bloom, and billet pass through several rotating rolls taking a series of constant pressure. During this process, I either get thinned out or get stretched as per the client order – in whatever thickness or length. This is the stage where I can finally become wire rods, plates, or coils.

After the rolling process was complete, I underwent yet another rounds of check-ups to see if I had all the adequate qualifications as a steel product. At this stage, I even received an identification tag! I still remember myself waiting in the storage room excited to leave for the next destination. Some of my siblings got on a ship to the United States, and some of my big siblings got transported to the port in Ulsan in a specially designed truck.

l Like Butterflies Flying All Around the World, Steel Travels and Is Everywhere

To become an adult, butterflies must undergo long and arduous journey – first fighting its way out of the eggs, and going through caterpillar and chrysalis stages. Just like butterflies, I was merely a piece of rock at birth. Then, I became sinter, then a pure ‘FE,’ then finally, steel.

My dream came true. I became advanced high-strength steel (AHSS) and got used in a car, in hydrogen batteries – also in refrigerators and washing machines! Some of me became a bridge that crosses over an ocean. I was reborn as indispensable products in people’s lives.

And I don’t just mean me in contemporary society. Even my ancestors played crucial roles in sparking Industrial Revolution and in accelerating modernization. It’s a well-known fact the Industrial Revolution kicked off right around when the steam engine started being used as the main energy source. Simultaneously, the advanced smelting technique during the eighteenth century helped replace wood railways with iron railways. Together with the steam engine, trains became another momentum pushing the Industrial Revolution forward. Even after the Industrial Revolution, I was used everywhere as construction materials, in the machinery, for ships, cars, and home electronics. I was present all throughout human history.

I go on quietly carrying out my duties whether people notice me or not. I am hiding in guitar and piano strings creating beautiful melodies – and even in ticking clocks and car tires. Have you ever noticed my presence?

Like a caterpillar who turned into beautiful butterflies, I, who was once an unpolished piece of rock is now traveling all around the world in different shapes and sizes. Look around! You will notice I’m everywhere – and right next to you, at this moment.