Conversion to low carbon in all industries worldwide is shifting the global business paradigm and technology innovation triggered by the Fourth Industrial Revolution requires fundamental changes in corporate management.
POSCO Group decided to convert to a holding company structure to survive in a business environment of great uncertainty and lay the foundation to leap into a company lasting a century. It aims to continuously enhance the competitiveness of existing businesses through POSCO Holdings Inc., its holding company, and to establish a management system that enables changes and adaptation by continuously developing and fostering future new businesses.
With the new launch of POSCO Holdings Inc. on March 2nd, POSCO Group plans to establish a balanced growth system by improving the competitiveness of each business, creating synergy, enhancing the development and fostering of future new businesses with the holding company at the center.
POSCO Holdings Inc. plays a role as a future business portfolio developer that establishes the group’s growth strategy, develops future business themes, and promotes new businesses such as M&A. POSCO Holdings Inc. also will diagnose and evaluate the group’s businesses, foster businesses, set the direction of restructuring, and find opportunities for new synergy from the perspective of the group and market as a whole.
In addition, it will lead the group’s ESG management such as the establishment of future new technology strategies with the establishment of the group’s comprehensive research system and recruitment and fostering of future R&D leaders, establishment of the group’s ESG strategies, and management of a carbon neutrality road map.
POSCO Group has set the goal of increasing corporate value more than three times by 2030 by increasing investment in future new businesses in tandem with the low carbon and eco-friendly era and aggressively developing opportunities for synergy at the group level, accelerating technology innovation and enhancing ESG management.
Furthermore, it aims to develop as a global business leader that is a role model for many companies at home and abroad by enhancing a virtuous cycle where the growth of corporations leads the growth of society by creating a huge engine for the creation of corporate citizenship value with greater economic and social values.
1. Growth Vision of POSCO Group
POSCO Group will promote growth based on seven major core businesses that can contribute to sustainability of the future society: ① steel, ② secondary battery materials, ③ lithium/nickel, ④ hydrogen, ⑤ energy, ⑥ construction/infrastructure, and ⑦ Agri-bio.
To this end, it has set “the global business leader for sustainable future of humanity” as its growth vision, and enhances the competitiveness of seven major core businesses that can contribute to the sustainability of future society: ① steel, ② secondary battery materials, ③ lithium/nickel, ④ hydrogen, ⑤ energy, ⑥ construction/infrastructure, and ⑦ Agri-bio to achieve five goals: ▶completion of Net-zero carbon in steel, ▶leading new mobility, ▶leading green energy, ▶realization of future housing, and ▶securing global food resources.
POSCO Group plans to establish a balanced growth system by improving the competitiveness of each business, creating synergy, and enhancing the development and fostering of future new businesses with the holding company at the center, and aims to increase its corporate value more than three times by 2030.
2. Growth Strategy of Seven Major Core Businesses
1) Steel business
Currently, each country and company in the steel industry announces a carbon neutrality plan and enhances its Nationally Determined Contribution (NDC) with the environment emphasized as a top priority, and trade barriers connected with environmental regulations have also been increased. In addition, while the demand for eco-friendly high-end steel, called “Green Steel,” is increasing, the supply and demand environment is expected to change as steel facilities are kept from expanding due to environmental burdens.
Thus, for the steel industry, POSCO Group plans to enhance global competitiveness with the establishment of an eco-friendly production system, enhancement of premium product sales, and increase in overseas investment.
In order to respond to changes in the steel industry, POSCO will establish a Zero-net carbon production system by investing KRW 2 trillion with the purpose of mitigating 20% in CO2 emissions including a 10% social reduction by 2030.
For hydrogen reduction steelmaking, an advancement in Net-zero carbon, POSCO will build a demo plant of HyREX, its own hydrogen reduction steelmaking model, in a national project by 2030 and verify the possibility of commercialization.
At the same time, POSCO plans to develop its businesses for the purpose of achievement of an average 13% operating profit rate from 2022 to 2030 by responding to the demand for low carbon products through coal use reduction technology and the implementation of a new electric furnace, and focusing on the improvement of profitability with the expansion of its eco-friendly brand portfolio.
For overseas business, POSCO also plans to expand crude steel capability from 5.1 million tons now to 23.1 million tons by investing KRW 12 trillion by 2030, thereby increasing the operating profit rate to 7%. To this end, it will secure global production capability by establishing a cooperative system with material and energy partner companies in areas that have eco-friendly competitiveness such as the production of Green Steel.
POSCO established overseas expansion strategies in India, taking hydrogen use into consideration, with the judgment that green hydrogen production competitiveness in India will be high, and plans to increase its integrated steel mill in Indonesia in preparation for demand in Southeast Asia, which has potential for steel industry growth. The United States, which has abundant steel scraps and eco-friendly iron sources, is emerging as a new growth market leading green steel, and POSCO is considering a joint venture for an electric furnace there.
2) Secondary battery material (cathode/anode) business
The purpose of the secondary battery material business is to increase the production capability of anode and cathode to 680,000 tons in 2030 from approximately 115,000 tons at present, and to leap into the global top tier by securing leading technologies.
First, for cathode, POSCO will promote the integration of its production base, which targets battery companies at home and abroad, and solidify its global status by increasing production capability to 420,000 tons by 2030 with the establishment of a large-scale plant through a joint venture with GM in the U.S.. In addition, POSCO will diversify its portfolio from premium to low-priced products to secure various sources of demand and develop materials for solid-state batteries to preoccupy the next-generation battery material market.
And for anode, POSCO plans to maintain global leading competitiveness in graphite and to advance into the silicone business and establish a production system of 260,000 tons by 2030. In particular, in the case of graphite, which has high dependence on imports from China, POSCO will diversify the supply of natural graphite to areas other than China, such as Tanzania and Australia, and also enhance the competitiveness of artificial graphite by having its own supply ability based on the only plant in Korea, which just finished the first step of construction this month.
Also, for silicon anode that will be used in next-generation electric vehicles, POSCO is cooperating with a European carmaker for the purpose of building mass production equipment by 2023.
3) Lithium/nickel business
For the lithium and nickel business, which are materials for secondary batteries, POSCO aims to become a global top manufacturer with a production capacity of 220,000 tons of lithium and 140,000 tons of nickel by 2030 through mines/salt lakes and the eco-friendly production technologies it has.
For lithium, POSCO continues to establish a high-competitive supply system with a salt lake in Argentina and shares in a mine in Pilbara, Australia, that it proactively secured in 2018. It secured eco-friendly lithium extract technology after R&D for the past 10 years, and is developing high value-added productions such as lithium sulfide and lithium metal for solid-state batteries.
For nickel, it plans to secure a total production capacity of 140,000 tons by 2020, consisting of 110,000 tons of ore-based nickel and 30,000 tons of recycling extract. POSCO increases production capacity through a joint venture with global nickel companies in Australia, Indonesia, etc., and invests in the conversion of some existing nickel for stainless steel to high purity nickel for batteries in order to respond to the soaring demand for electric vehicle batteries in a timely way.
Also, it will complete the construction of a step-one recycling plant in Gwangyang, Korea, in November next year for a waste battery recycling project, and aims to contribute to the circular economy for batteries through strategic cooperation with companies that have a global waste battery collection network.
4) Hydrogen business
For its hydrogen business, POSCO aims to achieve yearly sales of KRW 2.3 trillion and yearly production of 500,000 tons by investing KRW 10 trillion by 2030. It aims to become a global top 10 hydrogen supplier by establishing a hydrogen production system of 7 million tons annually by 2050 by upgrading its business over the next 20 years.
POSCO is Korea’s largest hydrogen company due to its own hydrogen reduction steelmaking and the power generation business of the group’s affiliate, POSCO ENERGY. It plans to establish a hydrogen business model connected to active external sales based on internal demand.
In the early stage, it is advancing into the hydrogen market using byproduct gas generated from its steelworks. The POSCO Group will establish a system that supplies 70,000 tons of byproduct hydrogen (grey hydrogen) yearly by 2026 for fuel cells and mobility.
By 2030, the production of blue and green hydrogen, which are being promoted overseas, will increase to 500,000 tons per year. After that, the company plans to gradually expand its production capacity to 3 million tons in 2040 and 7 million tons in 2050 to supply hydrogen to large-scale B2B consumers such as domestic and foreign steel, fuel cells, power generation, and charging stations.
To this end, POSCO Group is currently promoting 19 hydrogen production projects in seven strategic countries and securing a supply network and technologies. In the Middle East, POSCO is seeking to secure blue hydrogen allocation off-take with project quota investment with the world’s largest petroleum company, and is examining several green hydrogen production projects connected to steel in countries with excellent renewable energy production conditions such as Australia and Oman.
Also, it is securing core technology for the production and use of hydrogen. As a representative case, POSCO entered the R&D for an ammonia cracking technology to extract hydrogen from ammonia with the Korea Advanced Institute of Science and Technology (KAIST), and is co-promoting research on nuclear facilities in connection with high temperature water electrolysis technology with the Korea Atomic Energy Research Institute (KAERI), and ammonia mixed turbine generation technologies with Doosan Heavy Industries & Construction.
5) Energy business
In the energy field, POSCO will expand projects linked to the hydrogen economy such as LNG, ammonia, and new renewable energy.
It is carrying out a step 2 increase project with an LNG terminal in Gwangyang and also examining increases in Dangjin and other areas to expand the LNG business, which is highlighted as a bridge for the conversion to new renewable energy.
For the E&P business that produces LNG, POSCO plans to continue the development of a gas field in Myanmar and will develop exploration assets in Southeast Asia such as Indonesia and Malaysia.
For the power generation business, POSCO is promoting low carbon generation, an application of ammonia mixed technology in LNG generation, for the purpose of converting LNG generation to clean hydrogen generation in the long term. By expanding new renewable energy businesses such as wind power and photovoltaic businesses as well as LNG generation through joint ventures with advanced overseas companies, POSCO will increase the energy generation amount to 8.3GW, about 2.5 times the current amount, by 2030.
6) Construction/Infrastructure business
For construction and infrastructure, POSCO is increasing orders in eco-friendly fields such as zero energy buildings and modular construction for the purpose of receiving KRW 4.3 trillion in orders, and plans to continuously promote eco-friendly based growth by expanding hydrogen production plants and green new deal-linked offshore wind plants to promote sustainable growth.
7) Agri-bio business
For the Agri-bio business, POSCO is building value chains in foreign countries in North and South America for the purpose of sales of KRW 10 trillion by 2030 and is preparing a business bridgehead. Also, POSCO plans to increase its handling as a global food major, promoting the acquisition of palm plants where environmental issues are not raised and advancing into the palm oil refining business based on international environmental certification.
Also, POSCO Group will improve its future value by continuously utilizing venture investments as the group’s new business development channel under the holding company structure and fostering promising venture companies as global unicorn companies(unlisted companies with corporate value of KRW 1 trillion or more). To this end, the POSCO Group plans cumulative fund investment of KRW 800 billion by 2030, and the total amount of POSCO’s investment and outside venture fund is estimated to be more than KRW 4 trillion.
Venture funds can be divided into investment for group growth businesses, such as secondary battery materials and hydrogen, and promising new business fields such as graphene and bio, and venture investment will be used for the enhancement of POSCO Group’s business competence as well as the development of the group’s businesses.