Highly rated for HyREX (hydrogen reduction steelmaking) technology and stakeholder communication.

POSCO Holdings has been named a “Top Performer” after ranking 4th globally in the Just Transition Benchmark assessed by the World Benchmarking Alliance (WBA), a global sustainability evaluation organization.

The WBA is a non-profit foundation launched at the 2018 UN General Assembly. It selects 2,000 most influential companies each year to evaluate their contributions to the UN Sustainable Development Goals (SDGs). This year’s the 2,000 most influential companies list includes 50 Korean companies, including POSCO Holdings.

In this assessment, POSCO Holdings ranked 4th out of over 1,600 global companies in the Just Transition Benchmark, while simultaneously securing 1st place both globally and in Korea within the Steel and Mining sector. The company also demonstrated its ESG leadership in the Nature Benchmark, ranking 87th globally, 16th in the Steel and Mining sector, and 1st in Korea.

The recognition as a “Top Performer” in the Just Transition is a direct result of the company’s efforts to reduce carbon emissions through its “HyREX” (hydrogen reduction steelmaking) technology and its successful communication with stakeholders. POSCO Holdings scored 75 out of 100 in the Just Transition Benchmark, placing it in the top five global companies.

In recognition of these achievements, POSCO Holdings attended the WBA event held during the World Economic Forum in Davos, Switzerland, where it shared sustainability cases with other top-tier global companies. The company further strengthened international cooperation by discussing decarbonization alternatives.

▲POSCO Holdings ranked 4th globally in the WBA’s Just Transition Benchmark and was named a Top Performer. (Source: WBA Website).

POSCO Holdings received high ratings from various global ESG rating agencies last year. In the assessment published by MSCI (Morgan Stanley Capital International), the company maintained an overall grade A for three consecutive years. Additionally, it received a risk score of 23.3 (medium risk) from Sustainalytics, placing its management capabilities in the top 4% of global steelmakers.

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!

Recognized for efforts to transition to a low-carbon system, including the introduction of electric arc furnaces and the operation of a sustainability management council

POSCO was selected as the Sustainability Champion for the third consecutive year at the semi-annual member meeting of the World Steel Association, which was held in London, UK, on April 9 (local time).

▲Logo of the World Steel Association Sustainability Champion.

The World Steel Association has been awarding the title of Sustainability Champion since 2018 to member companies leading the steel industry in carbon neutrality and ESG initiatives. This year, 11 companies achieved this distinction, with POSCO earning the honor three times in a row since its first award in 2022.

To be named a Sustainability Champion, companies must fulfill four critical criteria: signatory to the Sustainable Development Charter, finalist in the Steelie Awards or the Safety & Health Recognition, publication of a sustainability report, and submission of sustainability data including Life Cycle Inventory (LCI) emissions data for materials and processes. Companies that meet these requirements are recognized as exemplary leaders in global ESG management.

In addition to meeting all four conditions, POSCO was recognized for its low-carbon transition efforts, including the introduction of electric arc furnaces and investments in Hydrogen Reduction Ironmaking Technology (HyREX), as well as new initiatives such as the establishment of a group safety council and a supply chain management council. These achievements have solidified POSCO’s status as a Sustainability Champion for the third consecutive year.

Furthermore, POSCO has been ranked as the most competitive steelmaker in the world by World Steel Dynamics for 14 consecutive years and continues to spearhead the global steel industry’s transition to carbon neutrality with innovations like its proprietary HyREX technology and the application of low-carbon bridge technologies.

Completion of the test facility with an annual capacity of 300,000 tons slated for 2027

Expansion of dedicated organization for carbon-neutral strategy and electric furnace advancement… Commencing full-scale implementation of the 2050 carbon neutrality roadmap

POSCO has opened a Hydrogen Reduction Ironmaking Development Center at Pohang Works and restructured its carbon-neutral organization.

The Development Center, which opened on January 26, plans to play a pivotal role in constructing test facilities for HyREX (Hydrogen Reduction Ironmaking), a proprietary process developed by POSCO, encompassing all stages from technology research to facility construction and test operations.

The Development Center houses the HyREX Project Team, the Investment Planning and Engineering Office, which is responsible for managing investment projects, the Low Carbon Iron and Steel Making R&D Center, and POSCO E&C for design responsibilities. This integrated approach encompasses everything from technological research and equipment setup to test operations.

Hydrogen Reduction Ironmaking technology, recently recognized for its strategic importance in national security and its impactful influence on the national economy, has been designated as a national strategic technology. POSCO’s Hydrogen Reduction Ironmaking Development Center plans to complete a HyREX test facility with an annual capacity of 300,000 tons by 2027 and validate the commercial viability of HyREX technology.

Si-woo Lee, who attended the center’s inauguration, said, “Let’s strive to become the first mover in the new Iron Age by developing Hydrogen Reduction Ironmaking technology, replacing carbon with hydrogen. I hope you will take on a new challenge as the first treasure of the new carbon-neutral economy^*, successfully implementing HyREX technology based on our experience in commercializing FINEX fluidized bed technology and developing SNNC electric melting furnace technology.”

*Economic National Treasure: A tangible or intangible economic and industrial heritage that has made a decisive contribution to the development of the Korean economy. Pohang Steelworks’ Blast Furnace No.1 was designated Economic National Treasure No. 1 in 2011 for supplying materials to industries like shipbuilding, automotive, and home appliances, significantly enhancing national industrial competitiveness.

In addition, POSCO has upgraded its Carbon Neutral Strategy Sector to a departmental level and appointed Hee Kim, the first female engineering executive, as Head of Carbon Neutral Strategy Department.

Furthermore, to complete and operate the electric furnace planned for Gwangyang Works, POSCO is actively pursuing the implementation of its carbon-neutral roadmap through the expansion and restructuring of its Electric Arc and Smelting Furnace Project Team).

▲The Hydrogen Reduction Ironmaking Development Center was inaugurated at Pohang Works on January 26.

▲On January 26, at the inauguration of POSCO’s Hydrogen Reduction Ironmaking Development Center, attendees pose for a commemorative photo. (Front row from left) Woo-young Jeong, Head of Investment Planning and Engineering Office; Seoung-jun Kim, Head of Steel Production and Technology Strategy Office); Chul-moo Lee, Head of Plant Business at POSCO E&C; Si-youl Choun, Head of Pohang Works; Si-woo Lee, President; Jean-su Lee, Head of Steel Production & Technology Division); Ki-soo Kim, Head of Technical Research Laboratories); Hee Kim, Head of Carbon Neutral Strategy Department); and Jin-chan Bae, Head of HyREX Project Team.

▲The Hydrogen Reduction Ironmaking Development Center.

[POSCO’s past]

The first integrated steel mill(ISM), a long-cherished desire of Korea, was born in 1973.

On July 3, 1973, Korea’s first ISM was born with the completion of the first phase of the Pohang works. The five government-led ISM construction projects had been tried since 1958, but had failed each time. After many twists and turns, the project succeeded by using funds of the claims against Japan.

In 1973, President Park Chung-hee presented a specific vision for Korea’s economic development. In his State of the Union Address, he declared a plan for heavy and chemical industrialization, thus emphasizing the importance of the Pohang works, which was nearing completion at that time. President Park’s declaration, which focused on intensively nurturing six strategic businesses – steel, petrochemicals, machinery, shipbuilding, automobiles, and electronics – was rooted in the smooth completion of the first phase of the Pohang works.

Full government-wide support and passionate interest

▲Commemorative stamps for the completion of the first phase of the Pohang works (left) and a large arch installation on Gwanghwamun Street in Seoul to mark the completion

The completion of the first phase of the Pohang works, which was a milestone that moved the wheels of Korean history and a turning point in the nation’s economic development, was possible thanks to the government’s full-scale support and the dedication of outstanding talents. It was a big, unprecedented project, and the amount was three times that invested to build the Gyeongbu Expressway.

During the 39-month construction period for the first phase of the Pohang works required 3,154,884 man-days in all, and 99,918 supervisors for technical guidance. In addition, a total of KRW 120.4 billion was invested in the project; KRW 49.3 billion of domestic capital and KRW 71.1 billion (USD 178 million) of foreign capital. The massive amount of resources and manpower invested in this project reflects the national attention and hot spotlight at the time.

▲First product shipped from Pohang works

The first phase of the Pohang works was a sign of success for the domestic steel industry. It achieved normal operation just four months after the completion. By July 1974, on the first anniversary of its operation, it had achieved a remarkable performance, resulting in a trade surplus of KRW 24.2 billion. POSCO also improved the quality of its products to an international level. For steel plates, it acquired international quality certification from Lloyd’s Register in the UK and other authoritative bodies in major countries. In 1973, its export performance reached USD 20 million in 21 countries.

POSCO’s steel products are the lever of the Korean manufacturing industry’s leap forward

As POSCO grew and steel production increased, major domestic manufacturing companies also grew. This was because POSCO served as leverage in the manufacturing industry by producing high-quality steel domestically and supplying it stably at low prices. In June 1974, HD Hyundai Heavy Industries launched Korea’s first large oil tanker, Atlantic Barron, made with POSCO’s steel plates, and Hyundai Motor also developed the nation’s first vehicle model, the Pony, in the same year.

▲Atlantic Barron, the first large oil tanker launched by Hyundai Heavy Industries (left) and the Pony, Hyundai’s first car model (right), made with POSCO steel plates <※ Source: The Dong-a Ilbo (provided by Hyundai Heavy Industries), The Kyunghyang Shinmun (provided by Ulsan Museum)>

According to the Ministry of Trade, Industry and Energy, when the first molten metal flowed from the Pohang works in 1973, the domestic shipbuilding volume was 12,000 Compensated Gross Tonnage (CGT) and automobile production volume was only 25,000 units. However, POSCO’s steel production volume last year was 38.64 million tons (domestic), and the manufacturing industries using steel also showed rapid growth: the shipbuilding volume was 7.81 million CGT, and automobile production was 3,757,065 units.

[POSCO’s present and future]

Steel legacies created by POSCO, becoming stronger to overcome crises

As of 2023, POSCO has eight blast furnaces (three at Pohang works and five at Gwangyang Steelworks) and two FINEX units. The production of molten metal did not decrease even after the first blast furnace was retired because the capacity was increased according to the number of blast furnaces. In 2021, POSCO achieved a record-breaking performance, surpassing KRW 70 trillion in sales and KRW 9 trillion in operating profit for the first time since its foundation. Crude steel production was 45.33 million tons, with consolidated sales of KRW 76.3323 trillion and operating profit of KRW 9,238.1 billion.

According to the Ministry of Trade, Industry and Energy, when the first molten metal flowed from the Pohang works in 1973, the domestic shipbuilding volume was 12,000 Compensated Gross Tonnage (CGT) and automobile production volume was only 25,000 units. However, POSCO’s steel production volume last year was 38.64 million tons (domestic), and the manufacturing industries using steel also showed rapid growth: the shipbuilding volume was 7.81 million CGT, and automobile production was 3,757,065 units.

▲The first product is being produced at the second hot rolling mill in Pohang, which was restarted after being shut down for 100 days due to flooding.

In September 2022, Typhoon Hinnamnor caused flooding of a river near the Pohang works that flooded the factory areas, which are three times the size of Yeouido. However, despite expert predictions that plant restoration would take at least six months, POSCO demonstrated remarkable resilience by resuming normal operations at all of its factories on January 19, just 135 days later. Undoubtedly, this was made possible by the dedicated and competent employees who lead POSCO, a company that remains strong even in the midst of a crisis.

Creation of another legacy: carbon neutrality

POSCO is now preparing for another 50 years. POSCO has already achieved its first legacy by growing into the world’s most influential steelmaker (ranking No. 1 for 13 years in a row), starting with completion of ISM 50 years ago. Now, as the next step, it aims to create the second legacy by developing hydrogen reduction Ironmaking technology that does not require coal, with the goal of achieving carbon neutrality by 2050.

▲POSCO HyREX(hydrogen reduction ironmaking) concept.

POSCO aims to complete the hydrogen reduction Ironmaking system by gradually converting existing production methods such as blast furnaces. Now, POSCO is developing commercial hydrogen reduction Ironmaking technology. This development leverages POSCO’s proprietary HyREX (hydrogen reduction) technology, which itself is based on the company’s exclusive FINEX technology using fluidized reduction furnaces.

In July last year, POSCO signed a business agreement for cooperation in hydrogen reduction Ironmaking engineering technology with Primetals. This British plant construction company had previously co-designed the FINEX* facility with POSCO. Following the agreement, the design process for the HyREX test facility began. This test facility is scheduled to be introduced in 2026 to verify the possibility of commercialization. POSCO aims to achieve its “2050 carbon neutrality” goal by completing the development of commercial HyREX technology by 2030. The plan further includes a gradual conversion of existing blast furnace facilities at Pohang and Gwangyang Steelworks into hydrogen reduction facilities by 2050.

*FINEX : This is a facility based on proprietary technology developed by POSCO, which achieved the word’s first commercialization in 2007. The FINEX process eliminates the step in which raw materials are pre-processed, instead directly using inexpensive powdered iron ore and bituminous coal to produce molten metal.

POSCO is playing a pivotal role in achieving carbon neutrality in the global steel industry

POSCO has been continuously conducting R&D towards the commercialization of hydrogen reduction Ironmaking, and has been putting considerable effort into forming alliances with global steelmakers to achieve carbon neutrality. In particular, in 2021, POSCO held the world’s first Hydrogen Iron & Steel Making (HyIS) Forum in Seoul. The event brought together global steelmakers, worldwide steel associations, raw material suppliers, energy and engineering companies, and officials from the government and international organizations. To prepare for the era of carbon neutrality, POSCO has been playing a pivotal role in the steel industry by sharing its insights to speed up the transition to hydrogen reduction Ironmaking technology. In addition, POSCO has been actively presenting its vision and goals for carbon neutrality to the international community by participating in the Green Materials Forum, Carbon Neutrality Expo, and World Climate Industry Expo.

POSCO’s hydrogen reduction Ironmaking technology is a national initiative

The hydrogen reduction Ironmaking cannot be accomplished by POSCO alone. It requires national support and attention, just like 50 years ago, when the Korean government recognized the necessity of the steel industry and was totally committed to promote the construction of an ISM. At that time, the government actively supported the construction of steel mills through site renovation, infrastructure development (including railroads, ports, and dams), and the enactment of the Steel Industry Promotion Act. Thanks to these efforts, the Korean steel industry has gained global competitiveness today.

In order for Korea to lead the paradigm of the steel industry again and seize new opportunities, active policies and support mechanisms led by the government and relevant government agencies should be established. This is because the transition to hydrogen reduction in steel production is an unavoidable prerequisite and a survival strategy for the national industry.

Governments around the world that have insight into this trend are offering unprecedented support to steel companies. The German Federal Government has decided to provide KRW 75 billion to ArcelorMittal Hamburg steel plant, while the German Federal and State Governments have decided to provide KRW 1.4 trillion to the steelmaker Salzgitter. The EU also provided KRW 190 billion from an innovation fund to Swedish steelmaker SSAB, which contributes to the transition to green steel. In this context, countries around the world are accelerating the establishment of infrastructure for a carbon-neutral value chain with direct funding by setting agendas at the government level.

To survive in the global competition for a new paradigm, there’s a great need for policy support for HyREX development and government-level construction of infrastructure to boost the price competitiveness of hydrogen. Designating hydrogen reduction Ironmaking technology as a national strategic technology is essential. This technology is directly linked to national competitiveness and is necessary for maintaining international competitiveness in the steel industry, a cornerstone of manufacturing.

While celebrating the 50th anniversary of the ISM’s completion, POSCO will open the second stage of the steel industry with the fierce determination of the day when it took on a seemingly impossible challenge. As a leading player in the industrial renaissance of Korea, POSCO is also deeply conscious of its responsibility to protect the future of K-manufacturing. In the era of great industrial transformation called carbon neutrality, it is necessary to establish policies and institutional support for the steel industry to safeguard the competitiveness of the domestic manufacturing industry and turn the times into an opportunity for economic growth.

POSCO, which is at the center of such changes, will become a more solid company for the next 50 years based on the experiences and capabilities it has accumulated over the past 50 years.

In the series on the “Great Conversion to Low-carbon Steelmaking Process,” we will take a look at the methods of executing net-zero carbon POSCO is promoting to achieve the goal of “net-zero carbon 2050,” such as the development of hydrogen reduction steelmaking, expansion of renewable energy, and CCS, to find a way to “survive.”

l Concept of HyREX and Hydrogen Reduction Steelmaking

Hydrogen reduction steelmaking is an innovative technology that produces iron using hydrogen (H₂) instead of fossil fuels. When fossil fuels such as coal and natural gas react chemically with iron ore, they generate carbon dioxide (CO₂), while hydrogen only generates water (H₂O). Therefore, hydrogen reduction steelmaking can dramatically reduce carbon emissions in the steelmaking process.

HyREX (Hydrogen Reduction) is a steelmaking method that manufactures molten metal using iron ore fines and hydrogen based on the FINEX fluidized reduction technology POSCO has.

l The Fluidized Bed Reduction Reactor is a Core Equipment of Hydrogen Reduction Steelmaking

A common feature of coal, natural gas and hydrogen is that they play the role of a reducing agent that takes oxygen (O₂) from iron ore (Fe₂O₃). The core of hydrogen reduction steelmaking is the reduction furnace, a device where the reduction reaction of iron ore by hydrogen occurs.

In the traditional steelmaking process, a blast furnace plays the role of a reduction furnace. A blast furnace is operated as ore and coal are processed into a form that is suitable for use and put into the blast furnace and hot air is introduced. The hot air burns the coal and carbon monoxide gas generated in this process causes a reduction reaction that takes oxygen from the ore. Also, 1,500℃ or higher heat generated inside the blast furnace makes molten iron, causing a reaction that melts ore. In other words, a reduction reaction that takes oxygen from ore and a melting reaction that melts reduced solid iron (Fe) occur at the same time with coal in the blast furnace.

However, in the hydrogen reduction steelmaking process, the reduction reaction and melting reaction occur in a reduction furnace and electric furnace, respectively, not in a blast furnace. First, iron ore (Fe₂O₃) contacts hydrogen heated to a high temperature to make iron (Fe). The iron made this way is called direct reduced iron (DRI). After that, if DRI is put into an electric furnace and melted, molten iron is produced.

The reason why the core of the hydrogen reduction steelmaking is a reduction furnace is that it produces DRI using 100% hydrogen, which has not been commercialized yet globally. With current technologies, it is possible to produce DRI using some of the hydrogen generated in the process of using coal and natural gas. Also, with POSCO’s FINEX technology, about 25% of the hydrogen generated during the use of coal is used in the reduction of iron ore. POSCO is preparing to promote the development of HyREX technology that uses100% hydrogen based on fluidized reduction furnace technology applied to FINEX with the Korean government and steel companies. On the contrary, European, U.S., Chinese and other overseas steelmakers are promoting the technical development of a shaft furnace that reforms natural gas (CH₄ ) into carbon monoxide (CO) and hydrogen (H₂) gases for use.

POSCO held Hydrogen Iron & Steel Making 2021 (HyIS 2021), the first international forum on hydrogen reduction steelmaking, in October last year. In this event, POSCO introduced HyREX technology to global steel companies for the first time. The fluidized bed reduction reactor applied to HyREX is hydrogen reduction steelmaking that is completely differentiated from the shaft furnace method overseas steel companies use, from the type of iron ore to the method of contacting hydrogen. POSCO plans to enhance its future global steel technology leadership by verifying HyREX technology by 2030 and leading the era of sustainable steel.

l Differences between HyREX Fluidized Bed Reduction Reactor and Shaft Furnaces of Other Steelmakers

Then what is the difference between POSCO’s Fluidized Bed Reduction Reactor and the shaft furnaces of other steelmakers? There are three main differences.

First, a difference in materials. A shaft furnace uses pellets, iron ore that was crushed and screened and then processed in a round shape with a certain size, while a fluidized bed reduction reactor uses iron ore fines, which is just mined without processing.

Second, a difference in methods of contact between materials and hydrogen reduction gas. In a shaft furnace, hydrogen, a high-temperature reduction gas, passes through empty spaces between pellets from bottom to top, causing a reduction reaction of the pellets. The reduced pellets become DRI by going into the reduction furnace and coming out.
Gas permeability in the shaft furnace is important for reduction gas to pass smoothly through the spaces between pellets, so iron ore is processed as pellets with a certain size and strength, for use.

On the other hand, in a fluidized bed reduction reactor, high-temperature reduction gas is evenly distributed through a perforated grid at the bottom of the reactor to fluidize iron ore fines and causes a reduction reaction by mixing the iron ore as if mixing liquid. The reduced iron ore fines become DRI after going through multi-stages reactors. Due to such differences in contact methods, the fluidized bed reduction reactor can use iron ore fines without pretreatment .

Third, a difference in carbon emissions. Generally, 50 – 150 kg of CO2 is emitted when 1 ton of pellets is produced. This means that for a shaft furnace to minimize carbon emissions, renewable energy such as wind energy or solar energy should be used for manufacturing pellets. On the contrary, in the case of the fluidized bed reduction reactor that uses iron ore fines, there is no concern about carbon emissions as with the pellet process.

l Why Did POSCO Develop HyREX Technology?

The reason whyPOSCO developed HyREX hydrogen reduction steelmaking technology, to which fluidized bed reduction reactor is applied, not shaft furnace, is mainly divided into material aspect and equipment technology aspect.

First, in terms of material, it is easy to secure materials for HyREX, and production is economical because iron ore fines can be used as they are. As of 2020, the world’s iron ore production is 1.8 billion tons, of which the pellet supply is 420 million tons. This means that the current pellet supply cannot satisfy global steel demand. In December last year, the International Iron Metallics Association (IIMA) predicted that the world will face a supply shortage of pellets for DRI by 2030 without additional investment in material production and innovation in steelmaking technology (see related article).

We can increase pellet production. However, there is a limitation to this. Pellets are mainly produced in Europe and the United States using only hematite and magnetite, and these ores account for only 30% of global iron use. Limonite, which is difficult to use for pellets, accounts for the remaining 70%. Also, in terms of cost, the price of iron ore fines as of 2021 was lower than that of pellets by USD 85 per ton and this is because additional processing of iron ore fines is needed to produce pellets.

There are various types of pellets according to grade. However, since low-grade pellets can degradate and generate powder and agglomerates in a semi-molten state, which decreases permeability and makes DRI discharge difficult, expensive high-grade pellets are usually used for shaft furnaces.

In July last year, the global consulting company McKinsey & Company expressed concern that limited production of high grade raw materials could hinder the Sustainable conversion of the steel industry (see related article). Given that there are just 49 million tons of high-grade pellets to produce DRI out of 110 million tons in the world’s port traffic, except for consumption in the nations that produce pellets, it seems that the competition over high-grade pellets among steel companies will become fiercer.

Next, in terms of equipment technology, a fluidized bed reduction reactor has an advantage for controlling temperature of the bed compared to a shaft furnace. The temperature control technology for a reduction furnace is critical in hydrogen reduction steelmaking, as iron ore causes reduction defects if the heat in the reduction furnace is low. The reduction reaction of iron ore using fossil fuels such as coal or natural gas is an exothermic reaction that self-generates heat, while the reduction reaction of hydrogen is an endothermic reaction that absorbs surrounding heat when it contacts iron ore, easily causing a shortage of heat in a reduction furnace. In other words, heat should be continuously supplied to the reduction furnace from outside and controlled to prevent reduction defects caused by low temperature.

Heat in a reduction furnace is supplied by high-temperature hydrogen reduction gas heated by reaction with oxygen. A fluidized bed reduction reactor consists of a multi-stage reactor where several reactors are arranged in the shape of stairs, and each reactor can control temperature through additional oxygen input. Heating is possible on the walls as well as the bottom of the reactor, so injection of reducing gas at 900℃ or less can cause a sufficient reduction reaction. A shaft furnace, however, consists of a single-stage reducing furnace, and thus the temperature of the whole reduction furnace should be controlled by only the heat of reduction gas injected at the bottom. Therefore, the temperature of the top of the reduction furnace can easily become lower, and it needs injection of high-temperature reduction gas at 1000℃ or more.

Global steel companies are developing hydrogen reduction steelmaking, which partially adds hydrogen in a shaft furnace that currently uses natural gas as a reducing agent. Shaft furnaces are mainly divided into types according to the natural gas reforming method and operation pressure. ArcelorMittal, a multinational steel manufacturing corporation, adopted the MIDREX method, which requires high equipment investment, although its operation stability is high because it occupies 60% of global DRI, while Swedish corporation SSAB and German company Salzgitter adopted the Energiron method, which is relatively favorable to hydrogen conversion, as equipment investment costs and sunk costs are low. SSAB has produced 1 ton of DRI per hour in the pilot stage of the HYBRIT project.*
* Hydrogen Breakthrough Ironmaking Technology (HYBRIT) project: A joint project between Swedish steel company SSAB, iron ore production company LKAB, and energy company Vattenfall for promoting Sustainable steel production.

The International Energy Agency (IEA) predicted in a report (see related article) in October 2020 regarding the prospect of hydrogen reduction steelmaking commercialization that it will take a considerable time to develop the technology to overcome the heat shortage of reducing furnaces and limitation of raw materials for 100% hydrogen conversion of shaft furnaces.

l Plan for Commercialization of HyREX

POSCO will build a test facility with annual production of a million tons in Pohang Works by 2028 in cooperation with the government and Korean steel companies to confirm the possibility of commercialization of HyREX technology, a hydrogen reduction steelmaking method based on FINEX fluidized bed reduction reactor technology. This means a technical confirmation of the difference between fluidized reduction operation and existing FINEX to convert the existing method where the carbon monoxide (CO) of FINEX fluidized reduction furnaces is partially mixed with hydrogen or 100% hydrogen. Also, process technology for a new electric furnace dedicated to hydrogen reduction steelmaking is being developed. DRI made of fossil fuel has a small amount of carbon due to carburization reaction. If DRI has carbon, the melting point of iron (Fe) is lowered by 200~300℃ from 1538℃, making melting easier. On the other hand, DRI produced using 100% hydrogen has no carbon at all, and melting is relatively difficult. Therefore, there is a need to develop a new type of electric furnace technology that is different from existing electric furnaces.

POSCO has successfully produced a cumulative 34 million tons of molten metal in a FINEX plant since the start of FINEX technical development in 1992 and the commercialization of the technology in 2007. In general, the technical development stage leads to the expansion of commercialization through the lab (verification of concept), pilot (verification of consecutive process) and demo (verification of commercialization) stages. However, POSCO plans to enter the demonstration stage from 2025 without a pilot stage and verify HyREX technology in 2030 based on its technologies and experience from FINEX process development. Also, POSCO plans to convert existing blast furnaces in the Pohang and Gwangyang steelworks to hydrogen reduction steelmaking in a phased manner by 2050.