Among the tightening global environmental regulations aimed at tackling the climate crisis, the decarbonization of the steel industry is emerging as a critical task for building a sustainable future. POSCO Group is leading a new paradigm in the steel industry through its differentiated decarbonization strategy, which includes HyREX technology, carbon-reduction bridge technologies, and a transition to clean energy. This special feature takes a closer look at POSCO Group’s “2050 Decarbonization Roadmap” and its phased technology deployment strategies that will drive innovation in steel decarbonization.

Towards a Sustainable Future! POSCO Group is Leading the Decarbonization Transition in the Steel Industry

POSCO Group has established its “2050 Decarbonization Roadmap,” which lays out a comprehensive strategy to decarbonize its steel business, the group’s most carbon-intensive sector. The roadmap covers critical areas such as raw materials, investment, energy, and technological innovation. POSCO Group keeps driving its decarbonization journey forward through continuous monitoring and annual updates.

▲POSCO’s “2050 Decarbonization Roadmap,” which includes a comprehensive mid- to long-term strategy encompassing technology development, facility investment, raw material procurement, and energy procurement. [From the 2024 POSCO Holdings Sustainability Report]

Development of Carbon Reduction Bridge Technologies

During the transition to hydrogen reduction ironmaking, POSCO Group is striving to reduce carbon emissions through the parallel deployment of multiple bridge technologies, including the use of low-carbon fuels and raw materials, the introduction of large-scale EAFs, and CCUS demonstration projects. With intelligent factories powered by data and AI, POSCO Group is improving energy efficiency and ensuring a safer working environment.

① Blast Furnace-Based Carbon Reduction Technologies

The blast furnace, commonly referred to as a smelting furnace, serves as a core facility in steel production. Coal (coke) and iron ore (sintered ore) are fed into the top of the furnace and layered, while hot air is injected from the bottom, melting the raw materials to produce molten iron. To reduce carbon emissions from blast furnaces, improving the raw materials and reduction processes is essential. POSCO Group is advancing blast furnace-based carbon reduction technologies through three main methods: pellets, Hot Briquetted Iron (HBI), and hydrogen-rich gas.

Pellets are made by crushing and screening iron ore and shaping it into uniform spherical forms. These are used in blast furnaces as a substitute for sintered ore, which was traditionally used as ironmaking feed. Simply switching raw materials from sintered ore to pellets can reduce the amount of fossil fuels required in sintered ore production, thereby lowering the CO2 emissions intensity. In addition, pellets melt and are reduced more effectively at higher temperatures than sintered ore, which helps decrease coal consumption in the blast furnace.

Hot Briquetted Iron (HBI) is produced by removing oxygen from iron ore to make Direct Reduced Iron (DRI) and then compressing it into pillow-shaped briquettes, which are charged into the blast furnace. This method significantly reduces the amount of coal required for the reduction process. Assuming 100 kg of HBI are used to produce one ton of molten metal, approximately 100 kg of CO2 emissions can be avoided.

Hydrogen-containing gas method uses natural gas (NG), a low-carbon fuel, as a reducing agent instead of coal. The main component of natural gas, methane, is reformed into carbon monoxide and hydrogen during the reforming process, generating hydrogen-containing gas. This gas is then injected into the tuyere at the bottom of the blast furnace and used as a reducing agent, which helps reduce coal consumption. In the first half of 2023, POSCO installed a natural gas injection system for its blast furnaces and confirmed its carbon reduction effect. The company is also working with 29 industry–academia–research partners on the national R&D project COOLSTAR.* Based on this facility, POSCO is developing hydrogen injection technology for blast furnaces and plans to package it as a bridge technology to establish a low-carbon blast furnace model.

**COOLSTAR (CO2 Low emission technology of Steelmaking And hydrogen Reduction): A national R&D project led by the Ministry of Trade, Industry and Energy of Korea to develop hybrid steelmaking technologies that reduce CO2 emissions.

② BOF-Based low Hot Metal Ratio (HMR) Operation Technology
The basic oxygen furnace (BOF) is a facility that produces refined steel (ingot steel) by blowing oxygen into molten iron (molten metal) from the blast furnace to remove impurities and adjust the temperature and composition. Since more than 80% of the CO2 emissions generated in the production of one ton of ingot steel occur during the molten iron production stage, reducing the amount of molten iron used in the BOF is critical for cutting carbon emissions. POSCO Group is developing low Hot Metal Ratio (HMR) operation technology to lower the proportion of molten iron charged into the BOF. Let’s take a look at two representative technologies used in low-HMR operations.

The Melted Scrap Charging Method reduces the amount of molten iron used in the converter by blending molten iron from the blast furnace with ingot steel produced in the EAF. Since the EAF uses recycled steel scrap as raw material, its carbon emissions are significantly lower than those of the blast furnace. Therefore, by utilizing scrap melting and charging technology in the EAF, producing 2.5 million tons of molten metal annually is expected to achieve carbon reductions of up to 3.5 million tons compared to conventional blast furnace operations. However, because of the residual elements in scrap, there are limitations in manufacturing high-grade steel products. To address this, POSCO Group is developing a technology that combines blast furnace molten iron with EAF molten metal to simultaneously achieve carbon reduction and the production of high grade steel.

The Oxygen Top & Bottom Blown (OTBB) Converter Technology increases the amount of steel scrap charged into the BOF by injecting oxygen from both the top and bottom to secure additional heat sources. In BOF, no external heat is supplied; the heat required for steelmaking is generated by the oxidation of impurities in the molten iron. Therefore, reducing the amount of molten iron and increasing the scrap ratio can lead to a drop in molten iron temperature. By injecting oxygen not only from the top but also from the bottom, the Oxygen Top & Bottom Blown (OTBB) Converter Technology enhances secondary combustion and maximizes heat transfer efficiency, effectively overcoming this limitation.

In this way, POSCO Group has developed technologies to increase scrap utilization by leveraging its existing BOF facilities. By optimizing scrap charging practices and adopting a two-stage BOF process, the company has expanded the scrap ratio to over 30%. In addition, when applying POSCO Group’s proprietary FINEX molten iron in low Hot Metal Ratio (HMR) operation technology, the molten iron ratio (HMR) in the BOF can be lowered to below 70%, which is expected to significantly reduce greenhouse gas emissions in the ironmaking process. Through these measures, POSCO plans to respond in the short term to growing customer demand for low-carbon steel products before fully transitioning to decarbonized production facilities.

EAF-Based Low-Carbon Steel Production Technology

Building an EAF production system to respond to EU CBAM and customer demand for carbon reduction

To accelerate global decarbonization, prevent carbon leakage, and protect the competitiveness of its domestic industries, the EU plans to fully implement the Carbon Border Adjustment Mechanism (CBAM) starting in 2026. CBAM is a system that imposes additional costs (carbon taxes) on products imported into the EU based on the amount of carbon emissions generated during their production processes. In response to this international regulatory shift and increasing customer demand for carbon reduction, POSCO Group established a dedicated CBAM response team in August 2022. The company is actively collaborating with POSCO Europe and POSCO International to strengthen its response to CBAM.

▲To transition to a carbon-reducing production system, POSCO invested approximately 600 billion won in February of last year to begin construction on a large-scale electric furnace plant within its Gwangyang works with an annual capacity of 2.5 million tons. Full-scale operation is scheduled for 2026. The photo shows a panoramic view of the Gwangyang works.

In addition, to establish a low-carbon production system, POSCO Group began construction of an EAF plant capable of reducing CO2 emissions by up to 75% compared to conventional blast furnaces, with an annual capacity of 2.5 million tons at Gwangyang Works in February 2024. The facility is targeted to commence operation in 2026. By applying Melted Scrap Charging Method, the plant is also expected to enable the production of high grade steel, which was previously difficult to achieve with traditional EAF operations. Through this initiative, POSCO aims not only to actively respond to CBAM but also to ensure a stable supply of low-carbon steel products.

Development of Carbon Capture, Utilization and Storage (CCUS) Technologies

▲An exhibition model showing POSCO Group’s carbon capture, utilization, and storage (CCUS) technology process.

POSCO and the POSCO Holdings Future Technology Research Laboratories are developing a wide range of CCUS* technologies to capture and recycle CO2 emitted from steelworks, thereby reducing overall carbon emissions. Currently, CCUS technologies are being demonstrated through multiple approaches, among which three representative applications stand out.

*Carbon Capture, Utilization and Storage (CCUS): A technology that captures large volumes of CO2 emissions and either utilizes them directly for industrial purposes, converts them into higher-value products, or stores them permanently or semi-permanently.

CO2 Injection and Conversion Technology in Coke Ovens

The first approach involves separating and capturing CO2 generated from the steelmaking process and injecting it into coke ovens, where it serves as a heat source for by-product gas power generation. Since 2021, POSCO has been collaborating with Research Institute of Industrial Science & Technology (RIST) on a joint public–private national R&D project to demonstrate CO2 capture and conversion technologies. A demonstration test conducted at Pohang Works in January 2024 confirmed that high-purity refined energy is not required, and that medium-purity CO2 can be effectively injected into coke ovens.

The demonstration also showed an increase in the calorific value of by-product gas (COG, Coke Oven Gas) generated from the coke ovens. COG is used as an energy source for fuel gas, by-product hydrogen production, and high value-added chemical products, and higher calorific value directly enhances its utility. Recognizing these achievements, this coke oven CO2 injection and conversion technology was selected as one of the MOTIE’s Top 10 R&D Technologies, and received the Minister’s Award.

Development of Mineral Carbonation Technology

The second approach is to apply mineral carbonation technology. The POSCO Holdings Future Technology Research Laboratories is developing CCU technology that mineralizes captured CO2 for onshore storage or reuses it as construction material.

▲Participants pose for a commemorative photo at the launch meeting for the ‘Pilot Project for Land-based Carbon Dioxide Storage in Abandoned Mining Sites’ in August 2024.

In July 2024, POSCO Holdings was selected as the lead organization for the national pilot project “Onshore Storage of CO2 Using Abandoned Mine Shafts,” organized by the Ministry of Trade, Industry and Energy (MOTIE). This project is designed to react CO2 emitted from steelworks with steel slag to immobilize the carbon and produce carbonated slag at a scale of 300 tons, which is then backfilled into abandoned mine shafts. In November 2023, POSCO Holdings began operating a demonstration plant in collaboration with Samcheok. Based on this pilot project, POSCO Holdings aims to address the carbon storage shortage, a critical limitation of national CCS initiatives, and contribute to the decarbonization of the steel industry.

Phased Commercialization of CCS

The third approach is to gradually apply CCS technology. POSCO has been exploring the most suitable carbon capture technologies for various facilities including coke ovens, sinter plants, hot blast stoves and power plants by leveraging commercially available CO2 capture solutions. Based on these assessments, POSCO plans to gradually expand CO2 capture starting with the most efficient and effective facilities.

After being compressed, liquefied and purified, the captured CO2 gains the physical properties needed for transportation and storage. The processed CO2 is injected into saline aquifers or depleted oil and gas fields that have sealed geological structures, where it is stored permanently. The sealed geological structure means a formation where non-permeable rock layers overlie permeable sedimentary layers, blocking the gas and keeping it from escaping.

POSCO Group is exploring promising CO2 storage sites not only at the Donghae Gas Field but also in Southeast Asia, including Indonesia, and in northwestern Australia. In 2024, POSCO Group was selected for a program by the Export-Import Bank of Korea that supports feasibility studies for international emission reduction projects. Through this program, the company carried out a preliminary CCS feasibility study at PT. Krakatau POSCO in Indonesia. Based on the findings, the company plans to further develop its CCS application methods and gradually expand their use to domestic steel mills.

POSCO’s Hydrogen Reduction Ironmaking (HyREX) Technology

▲POSCO’s HyREX hydrogen reduction ironmaking technology, displayed as a model at the 2024 Climate Industry International Expo.

POSCO is Securing a Low-Carbon Iron Ore Supply Chain through Fluidized Bed Reduction Furnaces

Hydrogen reduction ironmaking is a process that reduces greenhouse gas emissions in the ironmaking process by replacing the reducing agent and coking coal traditionally used to remove oxygen from iron ore with hydrogen. POSCO is developing hydrogen reduction ironmaking based on the fluidized bed reduction furnace technology of its already commercialized FINEX process. Unlike the shaft furnace method commonly used by overseas steelmakers, the fluidized bed reduction furnace has distinct differences in terms of raw material and equipment technology. Shaft furnaces require high-grade DR-grade pellets processed into uniform spherical shapes as raw materials, whereas fluidized bed reduction furnaces can directly utilize ordinary iron ore fines from mines without any additional processing, offering a clear cost and operational advantage.

Of the world’s total iron ore supply of 1.7 billion tons, DR-grade pellets account for only about 4%. This limited supply makes it difficult to meet global steel demand. If hydrogen reduction ironmaking is fully commercialized, competition for pellets is expected to intensify among overseas steelmakers that use shaft furnace technology.

In this increasingly competitive environment, POSCO Group has a strong advantage: by adopting the fluidized bed reduction furnace method, it can use iron ore fines directly from the mine without additional processing, which keeps production costs relatively low and improves raw-material security. In terms of equipment technology, the fluidized bed reduction furnace also allows easier temperature control than shaft furnaces. POSCO’s fluidized bed reduction furnace-based FINEX process, which incorporates hydrogen injection and direct reduced iron (DRI) production technology, is regarded as the most competitive technology in hydrogen reduction ironmaking.

Pushing for HyREX Commercialization by 2030

In 2021, POSCO Group initiated the permitting process to prepare 1.35 million square meters of land at its Pohang Works for the construction of a hydrogen reduction ironmaking plant. In July 2022, POSCO signed an engineering collaboration agreement with Primetals Technologies, a company with extensive experience in FINEX plant design. Based on this agreement, the two companies are jointly designing the main facilities of the HyREX demonstration plant and plan to construct a pilot facility with an annual capacity of 300,000 tons at Pohang Works.

POSCO Group aims to develop and complete the commercialization technology for HyREX through a demonstration project by 2030. Once national infrastructure, policy and institutional frameworks are in place, and market acceptance is secured, the company plans to gradually convert its existing blast furnace facilities to HyREX facilities.

Strengthening Global and Domestic Cooperation Networks for Hydrogen Reduction Ironmaking Development

Hydrogen reduction ironmaking has been recognized for its strategic importance to national security and the national economy. In January 2024, it was designated as a national strategic technology in Korea. In May 2024, “Development of Optimized Iron Ore Technology for Korean-type Hydrogen Reduction Ironmaking” (Steel Sector) was selected as one of the Global R&D Flagship Projects by the Ministry of Science and ICT. Building on this strong domestic consensus, POSCO Group is preparing a Korean-type hydrogen reduction ironmaking demonstration project in conjunction with government R&D programs, with a target of achieving commercialization by 2030. The company is also actively participating in various international technology development collaborations to accelerate global decarbonization in the steel industry.

Since 2023, POSCO Group has been operating the HyREX R&D Partnership to accelerate the development of carbon-reduction technologies by moving beyond competition to collaboration with global steelmakers. A total of 19 related companies—including global steelmakers, raw-material suppliers, and energy firms—are participating in this partnership. The first conference was successfully held in November 2024. POSCO has also been collaborating with the World Steel Association (WSA) and Swedish steelmaker SSAB. In 2021 and 2022, the company led the Hydrogen Iron & Steel Making Forum (HyIS Forum), and since 2023, the initiative has been expanded into the Breakthrough Technology Conference, which is organized by the WSA.

▲Content embodying POSCO Group’s decarbonization vision is on display at the 2025 Climate Industry International Expo. POSCO Group is pursuing substantial carbon reduction and expanded clean energy transition through AI and bridge technologies, centering on Korea’s Hydrogen Reduction Iron and Steel (HyREX).

Encompassing hydrogen reduction ironmaking, carbon-reduction bridge technologies, and energy transition, POSCO Group’s diverse real options strategies are expected to play a key role in accelerating the steel industry’s journey toward decarbonization. POSCO Group will continue to advance its decarbonization efforts in the steel industry, driven by technological innovation and a clear strategic roadmap. Follow POSCO Group’s decarbonization journey toward a more sustainable future!

l POSCO’s strategy to achieve carbon Reduction by fostering the hydrogen industry

From the standpoint of the steel industry, which consumes a lot of energy, the strategy of aiming for carbon Reduction by using green hydrogen (hydrogen produced using only renewable energy) is considered challenging but meaningful. POSCO, a representative steel company in Korea, declared its vision of in December last year, which aims to establish a 5 million-ton hydrogen production system by 2050 to pioneer the hydrogen business, future lower-emission energy with the meaning of leading the era of decarbonization.

POSCO has begun to proceed with measures to implement this vision. Last year, POSCO decided to cooperate with Australian iron ore company FMG in the green hydrogen business using renewable energy, and starting this year, POSCO decided to sign a business agreement with a leading domestic research institute for the promotion of research cooperation in the hydrogen field to secure hydrogen business capabilities in earnest. POSCO then signed an MOU with Orsted, Denmark, the world’s No. 1 offshore wind power company, to supply steel materials needed for the construction of an offshore wind farm and to participate in the production of green hydrogen using wind power, while preparing for the establishment of Korea H2 Business Summit with Hyundai Motor Company, SK, and Hyosung Group in which domestic companies participate.

l Hydrogen industry is inseparable from the steel industry

The reason why POSCO is so active in the hydrogen industry is that hydrogen is closely related to the steel industry. First of all, in the production sector, POSCO currently has an annual production capacity of 7,000 tons of hydrogen using byproduct gas (COG) and natural gas generated from the coke manufacturing process and extracts about 3,500 tons of byproduct hydrogen to control temperature and prevent oxidation during steel production. In the long run, it is developing a technology to commercialize the ‘hydrogen reduction steel’ method, a steel production method that does not emit carbon. This technology is a dream technology that no other steel company in the world has commercialized, and POSCO has already commercialized FINEX technology, the closest independent steel-making technology to hydrogen reduction steel, and has been operating it stably for nearly 15 years.

The FINEX method uses 25% of the reducing agent as hydrogen. Based on this advanced technology, POSCO plans to develop hydrogen reduction steel by gradually increasing the hydrogen concentration of the second fluidized reduction furnace in operation.

Meanwhile, the hydrogen industry becomes a new demand for special steel materials. Development and supply of steel materials suitable for each application are important for the development of the hydrogen industry, such as special high-pressure steel pipes for hydrogen transport, cryogenic steel for liquefied hydrogen storage, water electrolysis separator and fuel cell separator with excellent corrosion resistance and conductivity, and special steel with excellent corrosion resistance for the offshore wind power generator. POSCO has developed the world’s first steel product for hydrogen fuel cell separators and has the capabilities necessary for hydrogen production and use, such as supplying it to hydrogen vehicles produced in Korea.

▲ A Fuel Cell Separator made with POSCO stainless steel, Poss470FC, on display at POSCO’s booth at the North American International Auto Show in 2016.

l The great importance of securing green hydrogen

For carbon Reduction, it is also important to develop hydrogen-using technologies such as hydrogen-based steelmaking technology and to stably secure green hydrogen that does not emit carbon at an appropriate price. Hydrogen is abundant enough to account for 75% of the mass of the universe, but hydrogen gas is very rare on Earth. Therefore, humans extract and use hydrogen from easily available compounds containing hydrogen atoms, that is, water (H2O) or fossil fuels. It is inexpensive to produce hydrogen from fossil fuels which are hydrocarbon compounds, but it inevitably generates carbon dioxide (CO2), and Carbon Capture and Storage (CCS) technology is required to remove the carbon dioxide. CCS is still expensive, and it is not easy to secure storage places in Korea where the land area is small.

On the other hand, water electrolysis hydrogen using renewable energy power does not emit carbon, but its production cost is still high. Although the cost of renewable energy generation has been lowered a lot in recent years, Korea, which has a small land area and poor wind environment, has higher power generation costs than major countries due to securing resident acceptance and complicated licensing. Groundbreaking efforts are needed to reduce the cost of renewable energy generation.

In order to economically secure green hydrogen or blue hydrogen that does not emit carbon, it is necessary to actively consider ways to secure it abroad where production cost is low. According to recent research, it is expected that hydrogen will be produced inexpensively in Australia, the United States, and the Middle East, where the land area is large and natural conditions are good. The ways are to import hydrogen from these regions or by directly investing in renewable energy generation and hydrogen production. Liquefaction is essential to reduce the volume of imported hydrogen, and the method of converting it into ammonia is now known as the most economical method. POSCO’s recent efforts to secure hydrogen business capabilities including the development of lower-emission ammonia application technology, seem appropriate.

▲ The forecast for green hydrogen trade in 2050 according to countries. (Source: Bloomberg NEF, Hydrogen Economy Outlook, 2020.3.30)

l The necessity of Public-Private cooperation to realize carbon neutrality

There is a limit to secure and utilize green hydrogen for the realization of carbon neutrality only by the efforts of some companies. An industrial ecosystem should be established for each value chain of hydrogen production, distribution, and consumption, and the government’s leading role is important in the beginning. The government needs to actively expand hydrogen-related R&D investments and provide incentives such as tax reduction for private R&D investments. In addition, the government should provide supporting plans rather than regulations to facilitate transactions between hydrogen-related companies and establish a supply infrastructure for green hydrogen and low carbon power and a flexible market system.

POSCO hosts 50th global technology convention ‘World Steel Association Technology Committee (TECO)

TECO is a global convention in which global steel companies share their current status of technology development and discuss the current issues that the steel industry is facing. POSCO hosted the 50th TECO for a second time following its first hosting of TECO back in 2010, to celebrate its 50th anniversary this year.

At this convention, more than 60 experts from steel and related industries such as ArcelorMittal, NSSMC, Tata Steel and Voestalpine and also Secretary-General of the World Steel Association joined to shine the conventions. This convention held in Gyeongju, South Korea from April 23rd to April 26th.

Since sustainability has become main global issue, the main focus of the convention was carbon dioxide emissions and energy. The participants in the convention expressed their own perspectives related to the development of iron and steel manufacturing, rolling process technology and development of innovative products and digitalization that lead positive impacts on environment.

Wonderful opportunity to spread POSCO’s world premium technology

POSCO’s own technology that may shine in the convention is ‘high-manganese product and manufacturing technology that is invented first in the world. This unique technology was one of the driving forces of POSCO become world leading company.

Additionally, participants had a great opportunity to experience Pohang Steel Works, the FINEX plant, smart factory and rolling system and then visit POSTECH to see world’s 3rd 4G synchrotron accelerator.

* 4G synchrotron accelerator: ‘Ultra-high-performance gigantic microscope’ that observes the microscopic structures and reaction of materials using synchrotron radiation when accelerating electrons at the speed of light.

The World Steel Association, founded in 1967, is the most authoritative organization in the steel industry, which promotes the understanding and interests of the steel industry. Currently, as many as 170 steel companies, related associations and laboratories around the world are listed as members. The World Steel Association and the Technology Committee shares the technologies developed by individual steel companies in every year to propose joint research on steel technology and encouragement of cooperation.

The U-Shaped Relationship

However, the argument is not so black and white according to Spyridon Stavropoulos, Ronald Wall and Yuanze Xu’s Environmental regulations and industrial competitiveness: evidence from China. The study suggests that the relationship between stringent economic regulations and industrial (or economic) competitiveness is U-shaped. Meaning, initially, stringent regulations will increase the cost of production and make companies less profitable, but after a certain turning point, companies will be forced to adapt and innovate, thus becoming more competitive in the long run.

Many activists sit on both sides of the debate. (Source: Ethical Shopper)

When regulation policies are consistent over a long period of time, companies are forced to tackle the root of the problem, instead of focusing on meeting certain numbers. In today’s global economy, many governments have already begun to implement stringent economic regulations that only look to get tighter in the future. In such a context, companies that choose to innovate and come up with solutions to global pollution problems will come out more competitive in the end.

Sustainability Equals Competitiveness

Looking at major economic players around the world, it’s safe to say that environmental sustainability is a common topic on each of their respective national agendas. Pressing national challenges are tied to the environment in one way or another. For example, many countries are shifting their policies to ensure energy security. Countries that import most of their energy from external regions are subject to volatile prices and thus unstable economies. Thus, governments are actively supporting companies that can cultivate domestic, renewable energy sources. Another, more obvious, example is the direct link between pollution and health risks.

China is the fastest developing country in the world, and by 2035, it will be responsible for 28 percent of the total global energy demand. China also happens to be almost completely dependent on energy imports. Subsequently, the government has started a variety of government programs to boost sustainability as part of President Xi Jinping’s pledge to build a “Beautiful China”. These policies also come in the wake of shocking statistics: in 2015, pollution led to 1.8 million premature deaths in China.

Chinese President Xi Jinping laid out a 2-step plan to achieve a “Beautiful China.” (Source: News Gru)

Sustainable Steelmaker

Even with strong government commitment and plenty of programs to support sustainable business, most developing countries lack affordable renewable energy sources and the technology to apply those sources to existing production processes. Nevertheless, the world is changing and only those that adapt and innovate survive and thrive. That’s exactly what POSCO did starting back in 2007.

FINEX: A Game Changer

POSCO came up with a new molten iron production technology called FINEX. The technology allows molten iron and non-coking coal to be produced directly in a blast furnace during the iron-making process. It is different from the conventional blast furnace process, as it combines the coking plant, sinter plant and blast furnace into a single iron-making unit. This lowers production costs and reduces harmful emissions.

FINEX is a sustainable game-changer for steel production.

Ultimately, FINEX is one of the most cost-effective and eco-friendly ways to make steel. The technology mitigates the use of C02, has the lowest process-related emission rates and preserves resources through the use of a wide range of iron ores and non-coking coals. FINEX reduces SOx and NOx emissions by 40 and 15 percent respectively, and fine dust particles can be reduced by 34 percent compared to traditional blast furnaces. Furthermore, the by-products from the process generate highly valuable export gas that can be used for various purposes like electric power generation or natural gas substitution.

On December 7, 2017, POSCO reached 20 million cumulative tons of molten iron production using the FINEX technology. POSCO is not the only company enjoying the benefits of sustainable competitiveness – POSCO’s manufacturing partners can see lower emissions levels when evaluating the entire life cycle of their products.

SEE ALSO: POSCO Reaches 20 Million Tons of Production Using FINEX Technology

Sustainability is no longer just jargon. As environmental issues are intricately tied to the economy and even national security, governments around the world will be actively supporting sustainable companies in the years to come. Companies can expect sustainability and competitiveness to become interchangeable terms in the near future.

On December 7, employees celebrated reaching 20 million tons and took a commemorative photo.

FINEX is an innovative, paradigm-shifting technology where molten iron is produced directly in a blast furnace. The process eliminates preliminary processing and uses cheaper powder-type iron ore and bituminous coal as raw materials. Subsequently, investment and production costs can be reduced by 85 percent compared to those of general blast furnaces of the same size. In addition, the technology reduces SOx and NOx emissions by 40 and 15 percent respectively, and fine dust particles can be reduced by 34 percent compared to general blast furnaces.

The beginnings of the technology date back to the 1990s when the Korean government chose POSCO’s smelting reduction steelmaking for a national project and contributed KRW 22.2 billion for research and development.

As a result, POSCO started operating the FINEX 2 plant with an annual production capacity of 1.5 million tons in 2007, and the FINEX 3 plant with an annual production capacity of 2 million tons in 2014, which now produces 10,000 tons of molten iron every day. Surprisingly, the Korean steel industry, which was heavily reliant on foreign technologies in 1968, now leads the world’s steel industry in terms of technology.

However, the path to success was filled with challenges.

In 1998, objections were raised against additional investment for the FINEX technology because there were no clear, tangible results even after KRW 60 billion was invested. Even so, POSCO management made a decision to construct a demo-plant with an additional investment of KRW 100 billion for technology development in order to secure long-term competitiveness rather than seeking immediate profit.   

In addition, POSCO convinced steelmaker Voestalpine, who was in possession of the world’s leading technology for molten iron production, to participate in the project as a partner. POSCO was able to do this by offering to cover the full cost of dispatched researchers and engineers should the technology become successful.

In 2003, there was a slight setback when the newly-opened core FINEX processing facility failed to operate successfully. However, after dozens of tests with 80 in-house professionals over 3 months, the facility was up and running.

Molten iron is produced directly in a furnace in the FINEX plant.

Sang-ho Lee, Director in Charge of Commercialization at POIST, said, “With less than 50 years of steelmaking experience, POSCO has managed to achieve a next-generation, innovative steel-producing technology. It feels great because even though POSCO started as a fast follower of foreign technologies, we are now a leading company in the world’s steel industry with our FINEX technology.”

POSCO currently has over 200 patents for its FINEX technology and HCI technology in Korea and 50 patents in more than 20 countries worldwide. Many overseas companies have expressed an interest in FINEX, and POSCO is in talks with world-renowned steelmakers in China to export its FINEX technology.

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today.

In its October 2016 “Nerve of Steel” report, the Carbon Disclosure Project, or CDP, found that steel companies had quite a ways to go in order to meet targets set by the Paris Agreement – the industry as a whole would need to reduce emissions by 70% by 2050. While their report found that most companies were not doing enough to meet these targets, some companies, like POSCO, have been forging ahead with new technologies for more sustainable production.

Why are Reductions in Carbon Emissions Important?

In 2015, nations around the world met at the United Nations Climate Change Conference to negotiate the Paris Agreement. The goals of the Paris Agreement were to keep global warming below 2 degrees Celsius while also calling for zero net GHG emissions in the second half of the 21st century.

A 2-degree increase in global temperature is generally agreed upon by scientists to be the tipping point at which numerous problems arise including droughts, floods, and reductions in crop yields. However, many scientists also believe that if carbon emissions are not curbed quickly, and drastically, temperatures could rise by almost 6 degrees Celsius this century.

Due to the increasing urgency of curbing emissions, governments, businesses, and policymakers around the globe are working to find ways to cut GHG. To help inform this process, CDP transforms environmental performance data from cities, states, and businesses into detailed analysis on critical environmental risks, opportunities and impacts.

[clickToTweet tweet=”The CDP’s “Nerves of Steel” report shows how industry leaders like POSCO are leading the way toward more sustainable development.” quote=”The CDP’s “Nerves of Steel” report shows how industry leaders like POSCO are leading the way toward more sustainable development.” theme=”style6″]

Their “Nerves of Steel” report on the steel industry’s work to cut GHG emissions found few bright spots. The industry as a whole continues to be the main contributor of global carbon emissions with only a few companies, like POSCO, stepping forward to create more sustainable steel production technologies.    

Objectives and Findings of the CDP Report

CDP’s “Nerves of Steel” report found that overall progress in reducing emissions and energy use was limited and uneven across the industry. They found that in the past seven years more companies had increased their emissions intensity and energy intensity than had reduced them. Because of this lack of progress, they found that the steel industry was responsible for between 6-7% of total global emissions. Also, in order to meet Paris Agreement objectives, the industry as a whole would need to reduce emissions by a staggering 70% by 2050.  

Drew Fryer, a Senior Analyst at Investor Research at CDP noted that “The steel industry will have to play a huge part in achieving the 2-degree scenario laid out in the Paris Agreement. However, there has been no progress in reducing its emissions over the past decade. Steelmakers need to prioritize funding of a technology transformation to reduce emissions in order to ensure targets are met.”

Despite the grim outlook on the industry as a whole, CDP did highlight several companies that were working hard toward creating more sustainable steel production technology – among those top performers were POSCO, SSAB, ThyssenKrupp, and Hyundai Steel. See the table below for a full listing of CPD’s rankings.

How POSCO is Leading the Steel Industry in Sustainable Steel Production

CDP ranked POSCO first among all steelmakers for its work to produce steel through more sustainable processes. They noted that POSCO performed strongly across most key areas with below average emissions intensity. Also, unlike several other steelmakers, POSCO demonstrated an ability to reduce its emissions intensity significantly in recent years.

[clickToTweet tweet=”POSCO’s work to limit emissions has proven that more sustainable production can also be more competitive.” quote=”POSCO’s work to limit emissions has proven that more sustainable production can also be more competitive.” theme=”style6″]

While the report placed a strong focus on the industry not focusing on targets to limit global warming (six out of the 14 companies did not even publish targets beyond 2016), CDP noted that POSCO’s targets remain consistent with the goal to cut emissions significantly enough to reach the Paris Agreement objectives.

In particular, CDP highlighted POSCO’s FINEX technology that was developed and commercialized to provide incremental emissions reductions from steelmaking by eliminating sintering and coke oven processes. They also noted that the technology has the potential to be combined with carbon capture & storage (CCS) due to high concentrations of CO2 in waste gases, POSCO’s other active projects to separate and capture CO2, and their early stage work on carbon capture & use (CCU) and hydrogen-based steelmaking.

POSCO’s technological advancements in sustainable steel production have helped it reduce emissions while becoming more competitive.

In addition to these developments, POSCO continues its work to make its factories run smarter and more efficiently. AI and IIoT technology are helping to improve product quality for POSCO’s customers while also reducing waste and pollution. In addition, to be recognized by CDP as a leader in the steel industry, POSCO’s efforts have also been recognized by the Corporate Knights’ Global 100 list (#1 in Metals and Mining), and they have also been listed on the Dow Jones Sustainability Index for 12 straight years.

As the world works toward hitting emission reduction targets, governments, policymakers, and industry leaders must step forward to lead. POSCO’s work to limit emissions has proven that more sustainable production can also be more competitive.

*Cover image courtesy of the World Steel Association

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today.

The FINEX® Process

The FINEX® Process was jointly developed by POSCO in Korea and Primetals Technologies in Austria. FINEX® (along with COREX® – another smelting process developed by Primetals) is the only commercial proven alternative steelmaking process to the blast furnace (BF) route.

FINEX® is based on the direct use of iron ore fines and non-coking coal while eliminating the coke-making and sintering processes, which are most critical to the conventional blast furnace process. Combining these two decisive advantages leads to lower production costs and the reduction of environmental emissions in comparison with the conventional blast furnace route.

The FINEX® Process combines cooking plant, sinter plant, and blast furnace into a single iron making unit.

Advantages of the FINEX® Process

There are several key advantages to and differences in using the FINEX Process:

• Non-coking coal can be used directly as a reducing agent and energy source
• 100% fine ore can be directly charged to the process; no sintering or pelletising is required
• Pure oxygen can be used instead of nitrogen-rich hot blast

In addition, the FINEX® Process offers several key advantages over alternative BF methods.

• Economic benefits – low investment and operational costs due to the elimination of coking and sinter plants
• Ecological benefits – lowest process-related emission rates
• Product quality – hot metal quality suitable for ecological steel applications
• CO2 mitigation potential – pure oxygen is used
• Resource preserving – directly uses a wide range of iron ores and non-coking coals
• Beneficial by-products – generation of highly valuable export gas for various purposes (electric power generation, DRI production, or natural gas substitution)
• The FINEX® Process combines coking plant, sinter plant and blast furnace into a single iron making unit.

Creating The FINEX® Process

Starting in December 1992, POSCO and Primetals Technologies signed a cooperation agreement for the joint development of the FINEX® Process. Following initial laboratory, bench scale and pilot plant tests, the FINEX® F-0.6M Demonstration Plant, with a nominal capacity of 2,000 tons per day, was built in Pohang, Korea, and started up in May 2003. On the basis of successful results and optimization of equipment and process parameters over the past few years, POSCO developed their own independently designed program in February 2017. Designed to carry out overseas FINEX projects without relying on Primetals Technologies or other external resources, the program can be used to calculate core equipment specifications and raw material conditions. In particular, the development of the FINEX Process Design Program, one of the subprograms, has made it possible for the “heat & mass balance” to be automatically calculated when raw & fuel material conditions change.

[clickToTweet tweet=”The FINEX® Process is a cost-effective, more eco-friendly, and efficient way to make steel. ” quote=”The FINEX® Process is a cost-effective, more eco-friendly, and efficient way to make steel. ” theme=”style6″]

Efficiencies of the FINEX® Process

The FINEX® smelting reduction process is one of the most exciting iron making technologies on the market. It is distinguished by the production of high-quality liquid hot metal, on the basis of directly charged iron ore fines, and coal as the reductant and energy source. A key feature of the FINEX® Process is that iron production is carried out in two separate process steps. In a series of fluidized-bed reactors, the fine iron ore is reduced to direct reduced iron, compacted (HCI), and then transported to a melter-gasifier. Coal and coal briquettes charged to the melter-gasifier are gasified, providing the necessary energy for melting in addition to the reduction gas.

The FINEX® Process is Environmentally Friendly

The FINEX® Process and the blast furnace route are coal-based processes reducing iron ore to iron, which is subsequently melted into hot metal. In both processes, the same product is generated out of almost the same raw material. A question that arises – and not only from an economic point of view – is “how do these production routes deal with unwanted impurities?”

A certain amount of environmentally harmful substances is inevitable based on the raw material mix. Hence, the objective of a sustainable steelmaking process is to discharge these substances in an environmentally compatible condition or destroy them during the process itself. Since the FINEX® Process captures most of the pollutants in an inert state in the slag, and the released hydrocarbons are destroyed in the dome of the melter gasifier, no additional investment or operational costs are incurred for a complex gas or disproportional waste water conditioning plant.

Comparing the traditional blast furnace with the FINEX Process shows the improvements that POSCO was able to achieve to be more
environmentally friendly.

Future-Proof Emissions Figures

To bring blast furnaces in line with current and expected environmental standards, plants require significant investment. This can already be seen in the case of blast furnace dust emissions that are efficient, but costly filter systems must be installed in the sinter and coking plant. The FINEX® Process values are already far better than expected future standards. Moreover, the full development potential of the FINEX® Process has not yet been realized with respect to a further reduction of emissions.

Moving Forward with Greater Potential

Because the FINEX® Process is still being optimized, additional economic and technological benefits are anticipated. Major developments are continuously being carried out to increase efficiency. The latest achievements include breakthroughs in the field of heat recovery, dry dedusting, and outstanding performance improvements. Based on the well-proven plant concept, new process features, the highly competitive production costs, and environmental features, Primetals Technologies and POSCO are confident that the FINEX® Process will account for an increasing share of future investments in iron making facilities.

*Cover image courtesy of the World Steel Association

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today.

Iron Age

During the Iron Age, semi-solid steel, produced by simply reducing iron ore, was forged to create farm implements and weapons. It was not until the mid-14th century that liquid iron was extracted directly from iron ore. This became possible because high temperatures were reached with furnace bellows operated by waterwheels.

For over 3,000 years, until replaced by steel after 1870, iron formed the material basis of human civilization in Europe, Asia and Africa.

The Industrial Revolution in England

In the late 18th century, during the Industrial Revolution in England, the invention of the steam engine by James Watt enabled the blasting of air into the blast furnace with a machine. This made the mass production of iron possible.

While the iron making process had been centered on the coke blast furnace for 300 years, the steel production process has made leaps and bounds in the past 160 years.

Around this time, the S-Martin open hearth furnace appeared. Though it required an external heat source and its productivity was relatively low, it permitted a wide range of iron resources and allowed easy control of the temperature and composition of molten steel.

The S-Martin open hearth furnace became the predominant method of producing liquid steel for about a century, until the appearance of basic oxygen steelmaking in the 1950s.

Basic Oxygen Steelmaking in the 1950s

Basic oxygen steelmaking and continuous casting processes developed in the early 1950s are considered the most innovative technologies in the history of the steel industry. The two processes replaced the open hearth furnace and the slabbing and blooming process in integrated steel mills.

The integrated steel mills have many advantages such as high productivity, cost competitiveness and the ability to produce a wide range of high-quality steel products. However, they require large-scale facility groups with complex process configurations across a large land area. Other disadvantages include the generation of large quantities of environmental pollutants from the use of fossil fuels.

In the late 1980s, major global steel companies and research institutes led research and development activities to address the disadvantages of basic oxygen steelmaking in integrated steel mills. The focus was placed on developing new processes to replace the existing blast furnace in iron making.

POSCO’s FINEX technology

FINEX technology is one such new development. POSCO began researching FINEX technology in 1992, and successfully launched a pilot plant with an annual production capacity of 600,000 tons in 2003. At present, two FINEX facilities are in operation at POSCO Pohang Steelworks. One plant, launched in 2007, has an annual capacity of 1.5 million tons, and the other, opened in 2014, has an annual capacity of 2 million tons.

POSCO also plans to build another FINEX technology facility soon, but this time it will be located outside of Korea. POSCO recently signed a memorandum of agreement with Iran to build a FINEX technology steel mill in the Middle East country.

FINEX combines the iron making processes of sintering, coke making and blast furnace into one process. It allows the direct use of low-grade fine ore and coal without preliminary processing. This process dramatically reduces the generation of air pollutants such as SOx, NOx and dust.

The changing environment of the global steel industry

The attention of global steel companies is now focused on reducing greenhouse gas emissions and adjusting to the stricter global regulations on air pollution. These regulations are expected to expedite the restructuring of steel production facilities.

As a result, environment-friendly and innovative iron making technologies are expected to become commercialized soon. This would enable the use of low-grade raw materials across the globe. With the development and expanded utilization of new clean energy sources, steel production will depend increasingly on the utilization of economically produced steel, such as Direct Reduced Iron.

The future direction of the steel production process

According to the report, the steel production processes of the global steel industry are expected to move in three directions. First, large-scale seaside integrated steel works will continue to be highly competitive. Second, the expected increase in steel scrap availability and low-cost production of Direct Reduced Iron will increase the economic feasibility of procuring iron resources.

Third, inland regions in China, India and other large continent countries who are at a geographical disadvantage are expected to build simplified, compact, environment-friendly alternatives to outdated blast furnaces.

The three steel production processes are expected to coexist to produce low-grade raw materials and secure a smooth supply of steel products in inland regions where demand is forecasted to grow. This is expected to bring balanced and continuous growth for the global steel industry.

The steel industry has evolved and developed throughout history and thanks to the superior characteristics of steel materials and economic mass production it will continue to be an integral part of our lives for many more millennia to come.

Related Link:

In Southeast Asia, Surging Imports Lead to Rising Trade Barriers

The Future of Manufacturing in Korea

China’s Era of New Normal and its Implications on the Steel Industry

The Myth and Reality of Global Steel Overcapacity

POSRI Releases First Edition of Bi-Annual English Journal “Asian Steel Watch”

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

On February 29, POSCO signed a memorandum of agreement (MOA) with Iranian steelmaker PKP to construct an integrated steel mill. (Front row, from left) POSCO Executive Vice President Lee Hoo Geun, PKP Chairman Abdolreza Zoroufchian, and POSCO E&C Executive Vice President Kim Dong Chul. (Back row, from left) Minister of Trade, Industry and Energy Joo Hyunghwan, (fourth) Iranian Minister of Energy Hamid Chitchian.

Under the agreement, POSCO will shoulder 8 percent of the total construction cost of the steel mill—approximately $1.6 billion—and transfer its POSCO innovative steelmaking technology (POIST) to its Iranian partner. PKP will pay for the remaining 92 percent.

POIST is a combination of its own innovative FINEX and compact endless cast and rolling mill (CEM) technologies. FINEX is an environmentally-friendly technology for producing molten metal using powdered iron ore and bituminous coal directly as fuel without needing to undergo pre-treatment. CEM is a technology that reduces energy consumption by integrating the molten metal casting and steel rolling processes into one.

At the MOA signing ceremony, with over 100 participants, including the Minister of Trade, Industry and Energy Joo Hyunghwan, Iranian Minister of Energy Hamid Chitchian and POSCO Group officials, POSCO and PKP agreed to carry out the project in two phases. The first will involve the construction of the integrated steel mill; the second will consist of the establishment of an additional cold rolling and plating line with an annual capacity of 600,000 tons, to help accelerate production of high-value products.

Meanwhile, POSCO Energy and POSCO E&C also signed a memorandum of understanding (MOU) with the Korea Electric Power Corporation (KEPCO) and PKP to build an off-gas power plant and undertake a desalination project. POSCO Energy and KEPCO will be responsible for the operations and maintenance of the power plant and desalination facility, while POSCO E&C will oversee construction of the plant and facility. The power plant and desalination facility will later provide a stable supply of power and water for steel mills and the Chabahar Free TradeㅡIndustrial Zone (CFZ).

The construction site for the integrated steel mill is located in CFZ near the coast of Oman, south of Iran. CFZ is conveniently located due its abundance of raw materials and tax privileges. Before breaking ground in March 2017, POSCO will finalize the specifications for the facilities, and perform technical reviews and due diligence.
Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

The company held an Investor Relations meeting on April 21, where it announced that it had recorded 15.1 trillion won in sales revenue and 731 billion won in business profit on a consolidated basis for the first quarter.

Although sales revenue decreased slightly compared to the same period last year, business profit figures remained the same, thanks primarily to the expansion of the sales volume of higher value-added products, such as automotive steel, and the profits it has earned from its gas fields in Myanmar. Meanwhile, profitability also slightly increased by 4.8%. Net profit significantly increased, recorded at 370 billion won.

Solution Marketing Contributes to Increased Sales

With the expansion of solution marketing targeting clients in the main areas of industrial demand, such as automotive, shipbuilding, home appliances and construction, the sales of high value-added steel and world premium products have increased from 32.7% to 36% since the first quarter of last year. In particular, with POSCO’s automotive steel being recognized for its quality and technical value, it recorded 2.07 million tons of sales, which represents a 6% rise in year-on-year sales. This growth was achieved by expanding domestic sales as well as exports to automotive companies in Japan and Europe.

An Update on Global Projects

Daewoo International’s gas field in Myanmar has maintained stable business profit following its initiating commercial production, having swung into the black in December of last year. POSCO Energy can expect stable profits as the commercial operation of the Mong-Doung 2, a coal-fired power plant in Vietnam, which is partially owned (30%) by POSCO Energy, was launched in March.

High Value-Added Product Expansion Leads to Business Profit Increases

POSCO recorded 6.79 trillion won in sales revenue and 622 billion won in business profit. Despite the decrease in sales prices, business profit was able to increase by more than 20% from the level of last year thanks to the expansion of high value-added products, while profitability stood at 9.2%, which is 2.2% higher than that of last year’s numbers.

This is the result of customer-oriented solution marketing, which provides financial support to application technologies for the products customers want from the stage of product development. In other words, solution marketing has been largely responsible for the increase in high value-added product sales.

The volume of product sales through solution marketing activities is 470,000 tons, and includes the substitution of STS steel in heat pipes for chillers, the supplying of thick plates guaranteed by Brittle Crack Arrest (BCA) for the first time in the world, and the development of magnesium panels, a new lightweight material for cars. This volume represents an increase of 9% compared to the fourth quarter of last year.

New Growth Businesses and Organizational Reengineering

POSCO has discovered new sources of profit using the distinct technologies of steel and materials through the selection and concentration of new growth businesses. POSCO has established a foundation for the export of FINEX facilities and technologies by signing an MOA for the installation of FINEX plant No. 1 with the Indian steel company Mesco Steel. Furthermore, POSCO proved its mass production technology by succeeding in the operation of a bulk storage demonstration plant installed in Argentina for the processing of lithium, a material used in secondary batteries.

Meanwhile, POSCO is currently undergoing a process of organizational reengineering with the disposal of non-core assets and low-profit businesses. Specifically, POSCO PLANTEC is experiencing reorganization efforts, such as the streamlining of personnel and the withdrawal of deficit businesses, and it has signed an MOU for the share sale of POSCO E&C with Public Investment Fund (PIF), the Saudi Arabian sovereign wealth fund.