Steel has long supported our daily lives and industries, but over time, it may reach the end of its useful life and become scrap. POSCO group saw new potential in this discarded steel. By completing an electric arc furnace that uses electricity to melt steel scrap into molten steel, the Group has laid the groundwork for transitioning to lower-carbon production processes. What role will electric arc furnaces play in the transformation of the steel industry? Here begins the story of steel reborn to meet the needs of a changing world.

Steel is woven into nearly every aspect of our lives. It supports massive bridges, forms the homes and workplaces we rely on, and is an integral part of the vehicles that carry us to and from work. Yet some steel eventually corrodes and rusts, appearing to have reached the end of its useful life. Around the world, however, efforts are underway to recycle this rusted steel and give it new life—much like sculptors who melt and reshape steel into new forms.

This transformation is not limited to the world of art. On a far greater scale, the cycle of steel continues across industrial sites. One such site is the newly completed electric arc furnace (EAF) at Gwangyang works.

An EAF is a steelmaking facility that uses electricity to melt steel scrap and produce molten steel. By reusing steel that has already served a purpose, EAFs make a significant contribution to resource circularity. They can also reduce carbon emissions compared with the conventional blast furnace process,* making them a promising option for addressing global decarbonization requirements.

Alongside EAF technology, POSCO group is developing HyREX, a Korean hydrogen reduction ironmaking technology that removes oxygen from iron ore using hydrogen instead of coal as the reducing agent. As commercializing HyREX will take time, the Group moved forward with the introduction of an EAF as one of the practical solutions available for reducing carbon emissions. Construction began in February 2024, and in June, a large-scale EAF with an annual production capacity of 2.5 million tons was completed at Gwangyang works, laying the foundation for a transition to lower-carbon production processes.

* Compared with the 2017–2019 average, POSCO’s baseline period for calculating carbon reductions. The reduction rate may vary depending on steel scrap supply conditions and the power generation mix. Based on crude steel production and Scope 1 and 2 emissions.

The EAF at Gwangyang works incorporates continuous charging technology and a hot metal–molten steel mixing process. In the enclosed continuous-charging EAF, scrap is fed through the side of the furnace, allowing it to be melted continuously without opening the furnace roof. This helps reduce heat loss and fugitive dust emissions. Blending hot metal from the blast furnace with molten steel from the EAF is also expected to help stabilize product quality and reduce greenhouse gas emissions.

This transition also presents practical challenges that must be addressed. Steel production has traditionally used by-product gases generated during ironmaking, together with liquefied natural gas (LNG), to generate electricity. A shift toward EAF-based production could reduce the availability of these by-product gases, requiring steelmakers to purchase additional electricity from external suppliers.

Energy costs may also rise as relatively inexpensive coal is replaced by electricity. This could increase steel production costs and affect not only the price competitiveness of steel products but also the competitiveness of steel-consuming industries. To ensure the steel industry’s decarbonization remains sustainable, industrial electricity rates must therefore be discussed and set at reasonable levels.

As global competition intensifies over resource and energy supply chains, securing a stable electricity supply has emerged as a critical priority. Industrial policy can no longer be considered separately from energy policy. Japan, for example, is pursuing approximately JPY 150 trillion in public-private investment—including JPY 20 trillion in government funding—to advance its Green Transformation (GX), providing active financial support across industries. This reflects the recognition that companies face limits in securing competitiveness on their own, particularly when the development of decarbonization technologies such as carbon capture, utilization and storage (CCUS)* and next-generation nuclear power requires massive investment. As such global examples demonstrate, Korea must also establish a strong clean energy industrial foundation if POSCO group’s EAF and HyREX technologies are to take root successfully.

* CCUS (Carbon Capture, Utilization and Storage): Technology that captures carbon dioxide for use in industrial applications or permanent storage.

Steel scrap is no longer household waste to be discarded at the end of its useful life. It has become a vital resource for advancing resource circularity and ensuring a stable supply of raw materials.

Securing a reliable supply of high-quality scrap is therefore becoming increasingly important. Because the quality of raw materials directly affects the quality of steel products, the stable operation of EAFs requires an ecosystem capable of reliably collecting and sorting steel scrap. Building on this foundation, the broader adoption of EAFs and other lower-carbon production processes is expected to accelerate Korea’s progress toward its Nationally Determined Contribution (NDC).

Steel remains a precious resource. As it evolves in step with the needs of our time, its transformation will continue.

▼[The Evolution of Steel EP.2 Steel, Gaining New Life] Full Version ↓

Developing “Haptang” (hot metal mixing) technology to secure blast furnace-level quality, aiming to produce premium steel such as automotive steel sheets

Steadfastly executing the 2050 Decarbonization Roadmap… Establishing a business structure anchored in a decarbonized production system

POSCO (Representative Director and President Lee Hee-geun) has completed the construction of a large-scale Electric Arc Furnace (EAF) with an annual capacity of 2.5 million tons in Gwangyang, South Jeolla Province, officially embarking on the production of low-carbon steel.

The completion ceremony, held at Gwangyang Works on the 17th, was attended by Prime Minister Kim Min-seok, National Assembly members Kwon Hyang-yeop and Jo Gye-won, South Jeolla Provincial Council Chairman Kim Tae-gyun, Gwangyang Mayor Jeong In-hwa, and Gwangyang Mayor-elect Park Seong-hyeon. Key POSCO executives and representatives also attended, including Chang In-hwa, CEO of POSCO Holdings; Lee Hee-geun, President of POSCO; and Kim Seong-ho, Head of the POSCO Labor Union.

POSCO commenced construction of the new EAF in February 2024 to align with domestic and international decarbonization policies and proactively respond to customers’ growing demand for low-carbon steel products. The newly completed EAF is the largest single facility of its kind in South Korea, built with a cumulative workforce of 270,000 personnel and an investment of approximately KRW 600 billion.

While the traditional blast furnace-converter method—which inputs iron ore and coal (coke) into a blast furnace to produce molten iron and refines it in a converter—enables the mass production of high-quality steel, it is highly carbon-intensive. In contrast, an EAF recycles steel scrap, reducing carbon emissions by up to approximately 75%* compared to blast furnaces.

* Note: Compared to the average of 2017–2019, POSCO’s baseline years for calculating carbon reduction. This rate may vary depending on scrap supply conditions and power generation sources (based on crude steel, Scope 1 & 2).

POSCO is also focusing on developing “Haptang” (hot metal mixing) technology to enhance the quality of EAF-produced steel. This technology refines a mixture of molten iron produced from both the EAF and the blast furnace, enabling the production of premium steel while significantly reducing carbon dioxide emissions compared to conventional blast furnace operations. By securing additional core technologies—such as the selection and classification of scrap (the primary raw material) and precise composition control during the refining process—POSCO aims to mass-produce automotive steel sheets and electrical steel sheets by 2030.

To this end, POSCO has designated EAF-produced premium steel as one of its “Eight Strategic Products” and has accelerated the development of specialized products by forming an integrated project team spanning R&D, production, and sales. In addition, the company plans to concurrently develop “bridge technologies” that contribute to carbon reduction within the existing production system, such as hydrogen-rich gas injection into blast furnaces, top-and-bottom blowing converters, and carbon-reduced raw material technologies.

Recently, domestic carbon reduction requirements have intensified with the strengthening of Nationally Determined Contributions (NDCs) and the implementation of the Phase 4 Emissions Trading Scheme (ETS), alongside the full-scale rollout of the EU’s Carbon Border Adjustment Mechanism (CBAM). POSCO aims to transition to a decarbonized production system through its proprietary hydrogen reduction steelmaking technology, “HyREX.” Until HyREX is commercialized, the newly built EAF will play a pivotal role in driving greenhouse gas reductions and strengthening the company’s low-carbon product portfolio.

During the ceremony, Chang In-hwa, CEO of POSCO Holdings, emphasized, “The EAF completed today is not merely the addition of another facility; it is a powerful declaration of our commitment to resolving the defining challenge of our era—decarbonization—and reshaping the global market.” He added, “POSCO will proactively respond to the low-carbon steel demands of our global customers and further solidify our position as a leading provider of future materials.”

Prime Minister Kim Min-seok remarked, “The completion of the EAF at Gwangyang Works is a landmark event symbolizing the future of the steel industry as it evolves into an eco-friendly sector.” He promised, “The government will support the quality improvement and supply stabilization of steel scrap, and ensure the seamless execution of the hydrogen reduction steelmaking demonstration project.” He further emphasized, “The government will exert policy efforts to ensure that the hard work and dedication of the steel industry, which has served as a reliable pillar of our economy despite challenging domestic and international conditions, bear valuable fruit.”

POSCO is also accelerating the groundwork for the commercialization of HyREX. Following the Ministry of Land, Infrastructure and Transport’s approval of the Pohang National Industrial Complex plan revision last March, the reclamation of approximately 1.35 million square meters (410,000 pyeong) of public waters near Pohang Works has gained momentum. POSCO plans to complete the development of commercialization technology by 2030 using a 300,000-ton annual capacity HyREX demonstration facility, and progressively transition to a decarbonized production system.

▲ On the 17th, POSCO completed the construction of the EAF plant at Gwangyang Works. (From left) Gwangyang Mayor Jeong In-hwa; South Jeolla Provincial Council Chairman Kim Tae-gyun; National Assembly Member Kwon Hyang-yeop; Prime Minister Kim Min-seok; Chang In-hwa, CEO of POSCO Holdings; Kim Seong-ho, Head of the POSCO Labor Union; Lee Hee-geun, President of POSCO; and Gwangyang Mayor-elect Park Seong-hyeon.

▲ Prime Minister Kim Min-seok (left) and Chang In-hwa, CEO of POSCO Holdings, greet each other at the completion ceremony of the EAF plant at Gwangyang Works on the 17th.

▲ Prime Minister Kim Min-seok (right) and Chang In-hwa, CEO of POSCO Holdings, enter the completion ceremony of the EAF plant at Gwangyang Works on the 17th.