POSCO Mobility Solutions Expected to Expand Robot Automation at Domestic, Poland, Mexico, and India Sites

POSCO Group is partnering with Yaskawa Electric (hereafter “Yaskawa”), one of the world’s top three industrial robot manufacturers, to actively expand robot deployment in POSCO Mobility Solutions’ flagship product, the drive motor core production site.

On the 14th, a three-party business agreement signing ceremony was held at POSCO Mobility Solutions’ Cheonan plant. The ceremony was attended by Shim Min-suk, President of POSCO DX; Kim Sang-gyun, President of POSCO Mobility Solutions; and Yamada Seigo, President of Yaskawa Electric Korea, along with other business partners.

Through this collaboration, POSCO Mobility Solutions plans to gradually implement robots that transport motor cores produced by POSCO Mobility Solutions to quality inspection measuring equipment and sort the transported products by quality grade. These robots will be deployed at POSCO Mobility Solutions’ Cheonan and Pohang plants, as well as overseas sites in Poland, Mexico, and India. Prior to this agreement, POSCO Mobility Solutions and POSCO DX had already installed and operated these robots at the Pohang plant last year. POSCO Mobility Solutions expects this collaboration to enhance safety and maximize productivity in industrial sites, laying a solid foundation for future cost competitiveness innovation.

To achieve this, POSCO Mobility Solutions will identify the robot requirements required for production sites, while POSCO DX will design the layout of the robot automation system, considering integration with existing production facilities and systems, and provide and build the entire automation system. Yaskawa will provide the optimized robots and provide technical support, including after-sales service.

The drive motor cores produced by POSCO Mobility Solutions are key components in electric and hybrid vehicles, converting electricity from the battery into rotational power to turn the wheels.

POSCO Mobility Solutions produces drive motor cores and supplies them to global automakers such as Hyundai Motor Company, Tesla, and Stellantis. Yaskawa possesses motion control-based robotics technology in the industrial robotics sector, providing a competitive edge in high-speed, high-precision processes.

A POSCO Group official stated, “We are pursuing productivity improvements by applying robotic automation to industrial sites such as steel and secondary batteries. Through this agreement, we will strengthen our three-way collaboration with Yaskawa, a global robot manufacturer, and expand physical AI-based robotic automation, combined with AI technology, not only within our group but also to external industrial sites.”

Meanwhile, POSCO Group is actively promoting the creation of a safe and comfortable workplace based on technology by expanding intelligent factories across its manufacturing sites to enhance per-person productivity and by applying unmanned robot technology.

▲ A Yaskawa robot is transporting a manufactured product to a quality inspection measuring device at the POSCO Mobility Solutions Pohang Plant’s drive motor core stator production line.

Securing new global customers for the anode material business strengthens the foundation for business growth

Continuing customer expansion based on differentiated technology, manufacturing capabilities, and supply chain competitiveness

POSCO Future M is facilitating its global market expansion by securing a major Japanese battery company as a new customer.

POSCO Future M signed an anode material supply contract with a Japanese battery company on the 11th. The company plans to produce natural graphite anode materials at its Sejong plant and supply them for electric vehicle batteries manufactured in Japan. The specific contract partner, duration, and scale will not be disclosed by mutual agreement between the two companies.

POSCO Future M has achieved customer diversification for business growth by securing an additional major Japanese battery company as a customer.

POSCO Future M has developed various natural graphite and artificial graphite anode materials tailored to customer requirements, maintaining a broad product portfolio, and is also advancing the commercialization of silicon anode materials. Additionally, the company has enhanced price competitiveness by pursuing process innovations to improve anode material productivity.

In particular, the company is gaining attention in the global market by establishing a self-sufficient system for graphite ore and intermediate materials. POSCO Future M has been working with the POSCO Group to secure an independent supply chain covering everything from raw materials to material production in response to supply chain diversification efforts and trade regulations in countries including the United States and the EU.

For natural graphite anode materials, the company is achieving self-sufficiency by securing graphite ore from countries outside China, including Africa, and through domestic production of spherical graphite, an intermediate material. For artificial graphite anode materials, the company has secured supply chain competitiveness by processing coke from domestic POSCO steel mills to manufacture graphite raw materials.

POSCO Future M plans to continuously expand its customer base by leveraging differentiated technology to broaden its product portfolio and advancing manufacturing capabilities and supply chain competitiveness.

▲A view of POSCO Future M’s Sejong anode material plant, which produces natural graphite anode materials supplied to Japanese battery companies.

The 2024 Global Volunteer Week, POSCO’s special volunteer service event, was held from May 23 to 31. More than 20,000 POSCO employees in Korea and other countries participated in large-scale volunteer work to practice sharing. POSCO Newsroom has taken vivid photos of the volunteer activities carried out by overseas subsidiary employees worldwide. Let’s meet them!

▲ POSCO-ZPSS employees carried out various volunteer activities to celebrate Global Volunteer Week. They held a bazaar in the cafeteria and in front of the parking lot and donated a total of 16,000 yuan to special schools and families in need. They also visited Jin Xiu School in Zhangjiagang City to provide a voluntary service of taking graduation photos for about 300 students from low-income families and donated sportswear and sneakers to the women’s volleyball team players.

▲ POSCO-QPSS employees participated in the “Love Sharing Blood Donation” event hosted by the Qingdao City Blood Donation Center and held a charity bazaar with donated goods from 48 employees in the office building’s first-floor lobby. They donated a total of 1,779 yuan to the underprivileged.

▲ POSCO-Asia (Hong Kong) employees visited a local support group for underprivileged children and donated the future generation support funds raised through the 1% Sharing activities and participated in Food Angel volunteer work to make about 2,500 lunch boxes to distribute to neighbors.

▲Twelve employees of BX Steel POSCO Cold Rolled Sheet Co. visited the Korean-Chinese Middle School in Benxi and held an art contest with the theme “Waste sorting for environmental protection starts with me” as part of an eco-friendly knowledge learning class and awarded excellent works.

▲ POSCO-CSPC employees visited the Children’s Love Center, which was newly established by the Hua Qiao Government to help special children live a safe and convenient life, and provided various learning aids for children to use. They also placed air-purifying plants throughout the children’s center to create a pleasant indoor environment.

▲ POSCO-CCPC employees carried out an environmental cleanup at the Yulin river’s Long Xing Estuary near the company’s head office and collected waste by going around approximately 2 kilometers near the river road for two hours.

▲ POSCO-CDPC employees held a handmade craft event with clay drawings with children at a Hong Yan daycare center near the company’s head office.

▲ POSCO-CFPC employees held a Healing Summer event by inviting families of the disabled. They invited the families of the disabled to the Guangdong Industrial Design Complex and ran a program where the visitors could experience Guangdong Province’s industrial development and POSCO’s corporate culture.

▲ POSCO-CHPC employees visited a Wuhan Yi De senior welfare center, where they have been carrying out volunteer services for 9 years, and spent time with the seniors making zongzi, a traditional food for the Dragon Boat Festival.

▲ POSCO-CJPC employees visited a Jilin Chao Yang special school near the head office, laid out safety mats so that the children could rest comfortably and provided snacks.

▲ POSCO-CLPC employees donated five electric nursing beds to vulnerable groups living near the factory with donations collected through 1% Sharing activities.

▲ POSCO-CQPC employees visited the Qing Yu Village, a sister village that was having difficulties with timely harvesting due to a shortage of workers, helped the village people to harvest and package cherries, and donated the cherries to a local senior center.

▲ POSCO-CTPC employees collected 309 sets of old clothes that they no longer used and donated them to a public interest collection platform.

▲ POSCO-CWPC employees carried out activities to remove weeds from the factory’s idle site.

▲ POSCO-CYPC employees visited the beach in downtown Yantai, where many tourists go in the summer, and carried out environmental cleanup activities to pick up trash and put its ESG management philosophy into practice.

▲ POSCO-Japan PC employees carried out environmental cleanup activities for five days in the Toyohashi Sports Complex near the factory, the fishing park in the Yokkaichi Kasumigaura Industrial Complex, the area around the Kawasaki factory, and the vicinity of Higashi Ogishima West Park.

▲ POSCO-PMPC employees cleaned the roads and sewers to prevent flooding that may occur during typhoons and the rainy season in the First Philippine Industrial Park where the company is located.

▲ POSCO-Malaysia employees performed environmental cleanup at community halls and kindergartens near the company by trimming grass, painting old goalposts, cleaning the inside and outside of buildings, and collecting waste.

▲ All POSCO-MKPC’s Klang Factory employees walked a 2-kilometer path between the Klang Factory entrance and surrounding villages to collect waste to participate in the “Zero Disposable Plastic” waste reduction campaign.

▲ About 30 employees of PY NIVA (POSCO YAMATO VINA) purchased paint supplies using funds raised through the 1% Sharing program, repainted tables and chairs they previously donated to an elementary school near the company, and delivered scholarships of 10 million dong to students in need.

▲ POSCO-VST’s 130 employees went around the company to collect roadside trash and provided a fun time by holding a charity bazaar and traditional game competition at a nearby elementary school.

▲ POSCO-Vietnam’s 90 employees visited two orphanages near the company’s head office and had a good time with the children by distributing snacks and school supplies.

▲ POSCO E&C Vietnam employees visited Phuc Lam Orphanage Center and donated daily necessities, school supplies, and a support fund of about 1.6 million won to instill hope in children for the future.

▲ POSCO-Thailand PC’s 67 employees carried out the protection of the maritime ecosystem jointly with the Chonburi Province Coral Preservation Foundation by planting coral seedlings in the sea. Their activities were introduced in detail on the Foundation’s SNS.

▲ POSCO-TCS employees visited nearby Banpusai Elementary School, donated shoe racks and created a vegetable garden. Moreover, they replaced toilets and lighting in old bathrooms and provided education on safety and hygiene to the students.

▲ POSCO-Thainox employees cleaned pedestrian paths near the local municipality office, cleaned drains in preparation for the rainy season, and visited welfare centers for children and people with disabilities to donate daily necessities and carry out activities such as ceiling repair and restroom maintenance. Moreover, they donated relief supplies to nearby emergency rescue teams and self-made bulletproof panels in bulletproof vests to police stations.

▲ POSCO-ISDC’s employees visited a nearby school in Mangao, donated educational TVs and water dispensers, provided English lessons for students, and planted eco-friendly mango trees with the children.

▲ POSCO-Maharashtra employees visited a welfare center for visually impaired students and donated various items, including food and school supplies, to help students grow up in a good environment.

▲ POSCO-IDPC’s employess donated 30 barricades for traffic control to the Casola Police Station in the region. Moreover, they participated in the Indian government’s “Clean India Vision Campaign” by picking up trash and cleaning roads near the office.

▲ POSCO-IAPC employees walked around the roadside in front of the center, picked up discarded trash, and planted seedlings, contributing to creating a pleasant community environment.

▲ POSCO-ICPC collected trash around drainage ditches and removed steel items such as bolts from roads to prepare for heavy monsoon rains and safety accidents around the Chennai Center. In addition, to increase the convenience of nearby residents, the area was cleaned up with pedestrian roads and maintenance.

▲ Fifty employees of POSCO-India Pune Processing Center (IPPC) planted 500 fruit tree seedlings, such as guava, custard apple, and sapota, at Lake Talegaon Dabhade near the company.

▲ POSCO-IJPC’s 28 employees visited a nearby nursing home to celebrate Family Day in Indonesia, prepared chicken porridge and drinks for senior adults, and made and installed handrails in the front yard and walking path.

▲ PT. Krakatau POSCO employees visited a local school for the disabled, built a garden, repainted oil painting, and cooperated with the Ministry of Oceans and Fisheries to build an artificial fish reef at Ketapang Beach and clean up the shore. Furthermore, they participated in a blood donation event, delivering 221 blood bags to the Red Cross. They also conducted environmental cleanup activities at five local landmarks with military units and municipal officials from the Cilegon area.

In Part 2 of ‘2024 Global Volunteer Week’ overseas employee volunteer activities,
Overseas corporations in Turkey, Poland, the United States, etc.
Lively volunteer activities participated by POSCO International executives and employees
We will report on the scene. Thank you for your interest!

India

India’s government is incentivizing the use of steel by providing construction grants for regions that need revitalization. This government money is fueling growth and increasing steel consumption in regions across the country. Some predict that India will increase its rank and surpass China as the top consumer of steel in 2018. This is because India has not yet achieved the level of development China has. In China, the economy is shifting. For years, much of China’s economy was made up of companies in the manufacturing industry, but with a growing upper and middle class, many of China’s industries are going from factories to office spaces. Services are expected to increase in China and lead to a decrease in the need for supplies like steel.

Indian steel consumption is rising thanks to new development projects. (Source: Quora)

SEE ALSO: India: A Rising Sun in the Global Renewable Energy Industry

ASEAN (Association of Southeast Asian Nations)

Vietnam and the Philippines have been named two countries to watch in the ASEAN region. Unlike China and Japan, which have relatively more established economies, Vietnam and the Philippines are still in the development phase. Their rapid development is due in part to the growth of e-commerce. As the Vietnamese and Filipino governments race to build stronger countries, they’ll need steel to make improvements in the country’s infrastructure. Many of the cities in the region are outdated and in need of a total remodel. From creating a solid infrastructure to building offices and housing, steel will be in high demand in Vietnam and the Philippines in 2018.

Many ASEAN cities like Ho Chi Minh City pictured above is ripe for growth and development. (Source: Visa2Vietnam)

CIS (Commonwealth of Independent States)

CIS, also known as the Russian Commonwealth, is a confederation of 11 states made up of Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. While Russia is the biggest and most powerful member state, the developing states are eager to catch up. CIS countries will undergo development projects including major infrastructure construction. Such state-level projects will require large amounts of steel and CIS countries will have to vamp up its own production as well as meet its needs through imports. As CIS countries develop, their citizens quality of life will likely increase, and they are expected to consume more goods such as cars and appliances made of steel as well.  

CIS member states are ripe for development and steel consumption in 2018. (Source: The Kremlin)

Japan

In the summer of 2020, Japan is set to host the biggest global summer games event. The government is investing significantly in this effort to build new sports facilities and other structures to accommodate the global event. A new stadium itself is said to have a budget of over USD 2 billion, and most of the construction will require steel. Japan already has some of the best infrastructure in the world. But it will need to adapt in order to accommodate the large number of visitors Tokyo will host over the three-week event.

Japan will need to build many sports venues such as its new stadium pictured above for 2020. (Source: CNN)

The United States

In the United States, the steel market is consumer-driven, and steel is a USD 113 billion industry. The U.S. is already the largest importer of steel by a wide margin. But the U.S. demand for steel is expected to increase. Steel is used for construction, infrastructure, energy, production, packaging, appliances and manufacturing. Many cities in the U.S. are expanding and improving their infrastructure. Cities like New York and San Francisco have aging buildings and transportation systems that need to be revitalized. Steel construction is also a way of creating more energy efficiency. As U.S. cities move to become more conservative with their natural resources, steel is one of the ways to reduce energy use. Things like steel reinforcements, steel roofs and other upgrades make buildings more efficient. Many household appliances and automobiles are also made of steel. As U.S. consumers purchase household appliances, cars and buildings, the U.S. demand for steel will continue to grow in 2018.

While 2018 will not likely see 2017 rates of growth, the steel industry will continue to grow as demand for steel-based goods increases. As developing countries become more dependent on modernized infrastructure, housing and conveniences, the steel industry will continue to show growth for the foreseeable future. Even in China, where manufacturing is beginning to slow down, there is a great demand for steel. In developing smart cities, for example, steel and technology work together to create more efficient cities for all citizens. Steel infrastructure will play a major role in the improvement of cities across the globe for years to come.

The Demographic Cliff

Economic forecaster and author of “The Demographic Cliff,” Harry Dent, says people between the ages of 45 and 49 are typically the heads of families and spend the most money on things like housing, cars and appliances. As populations age, fewer people will make up the prime spending age group of 45 to 49, and there will be a drop in consumption. Dent calls this the “demographic cliff,” or the “consumption cliff”. The world has seen proof of this theory in places like Japan, Western Europe and the U.S., where economic downturn has come at times of a population downturn.

The Japanese stock market crashed in the early 90s, and they have yet to fully recover. (Source: Huffington Post)

Japan, for example, was one of the first nations to experience a demographic cliff in the early 90s. It was also the time when its stocks and real estate prices fell 60 percent. Those prices never rebounded. Since then, the country has spiraled into debt (the world’s highest at 246 percent of GDP) with an increasingly aging workforce and stagnant economy. From 2010 to 2015, Japan’s population decreased by almost 1 million people, and the government is working to prevent the population from falling below 100 million by 2060.

The U.S. 2008 Financial Crisis came shortly after its demographic cliff. (Source: Reuters)

Dent also argued that the American baby boomers of the early 60s peaked in 2007, at their highest spending age, and then the economy experienced a downturn, in the form of the 2008 financial crisis. Since then, the U.S. government has added USD 8.4 trillion in debt. Although the reasons for the 2008 crisis are complex, Dent does prove a point: demographics have a huge impact on economics.

Falling Steel Consumption

As it was with Japan and the U.S., consumption will decrease in industries critical to the steel market. In Japan, steel consumption decreased 81 percent from 1995. According to a report by POSCO Research Institute, construction accounts for 42 percent of total steel demand and the auto industry accounts for 18.5 percent. Decreased spending on homes and cars due to the demographic cliff will have a significant impact on the steel industry. Decreased demand in other industries such as machinery and home appliances will also affect steel demand.

The construction industry will be the hardest-hit by a demographic cliff. (Source: CNBC)

Moreover, manufacturers will be faced with the problem of a shrinking workforce. Those entering the workforce will do so with the burden of sustaining government programs with a larger portion of their paychecks, and employers will start to notice the gaps not only in age but experience and skill as well. With fewer people entering the workforce, employers will be forced to outsource jobs and governments may factor in more lenient immigration policies to fill the gaps.

How can Steelmakers Prepare for the Future?

Although there is no quick solution to the aging population and low birthrates, steelmakers can start preparing for a demographic cliff in two ways. Enter markets with growing populations and introduce smart technology to fill the human labor gap.

In developing countries in Asia and Africa, there are little signs of population and economic stagnation. As those countries invest in their infrastructure and start to consume more homes, cars and appliances, steel will be in high demand, more than those countries can produce domestically.

India’s solar energy industry will lead to an increase in demand for steel. (Source: WLE)

India is one of the countries with a growing population. The government is undergoing numerous projects to boost its economy and prepare for growth, including the project to boost its solar energy market. The Indian government has plans to invest USD 100 billion and 100 gigawatts (GW) of solar capacity for the country by 2022. Steel is a vital part of solar panels and suppliers like POSCO are already partnering with Indian firms to provide the leading material and technology for India to meet its growing renewable energy demand. POSCO also has partnerships in the U.S., Bangladesh, Myanmar, Uzbekistan and more to help each country fill their supply gaps.

In order to fill the domestic labor shortage, POSCO is incorporating leading AI technology, IoT and big data to its smart factories.

It is true that today’s developed nations have reached, or are heading towards a demographic cliff. Japan is a classic example of how detrimental a shrinking and aging population can be for a country’s economy. Governments and industries have to start factoring in demographics to their long-term strategies and plan for a changing future.     

Cover photo courtesy of 24×7 Daily.

Consider some of the bigger shifts in the US energy industry:

The Shale Revolution

The “shale revolution” has impacted the entire energy system in the US and worldwide. Although the elements of horizontal drilling and fracking had been known for decades, it was the entrepreneurial genius of men like George Mitchell of Houston who found the way to link these technologies and apply them commercially. It resulted in the US going from a natural gas importer to an exporter of pipeline gas and LNG, an exporter of oil (but not a net exporter), and the collapse of prices for gas, LNG, oil and oil products. It reverberated throughout OPEC countries and other major producers like Russia, as well as in major importing countries. It also enabled oil and gas producers to reduce their footprint overseas and focus on domestic production opportunities.

The “shale revolution” has impacted the entire energy system in the US and worldwide. (Source: Bloomberg Business)

Coal Industry

Coal, which had been king in the middle of the last century, has been declining rapidly, losing market share to often cheaper natural gas. The improbable opportunity to ship coal to Germany provided some relief. The Trump Administration may have won the election by making promises to US coal-producing states, but having an impact on this declining industry will take more than rhetoric. While much attention has been given to anti-coal regulation it has been market forces that caused electricity producers to shift from coal to natural gas.

Nuclear Energy

Nuclear energy faces the twin threats of obsolescence, as well as competitiveness with natural gas. The regulatory system also contributes to its decline. Many of the roughly 100 nuclear facilities operating in the US were built about 40 years ago, which means that they were due for major upgrades or retirement now. Only a few new plants are under construction, and they are massively over budget and have been built only in states with regulatory systems in which consumers must bear the cost of such overruns. Conventional wisdom had been that these plants would be upgraded and run for decades more. Instead several have announced shutdowns, and more are expected to follow. Nuclear had been considered a low-cost base fuel, but has trouble with competing with natural gas at current prices.

U.S. President Donald Trump and Secretary of Energy Rick Perry (Source: Fortune)

Energy policy in the Trump Administration, led by Secretary of Energy Rick Perry, is trying to protect both coal and nuclear because of their important role as baseload producers, in contrast to wind and solar that cannot provide consistent power to the system. But it seems doubtful that regulatory mechanisms will overcome market forces.

Falling Prices

The collapse of oil and natural gas prices led to the elimination of hundreds of thousands of jobs worldwide and slashing capital budgets, especially for higher-cost production such as deepwater, the Arctic, and other frontier environments. The shale play was led by small independent companies, but many of them took on too much debt, spent too much money to buy leases from mineral-rights owners, and drilled but often didn’t complete wells because of a focus on future growth. A number of them have failed financially or sold off properties. Even giants like BHP Billiton, which entered the US shale market with a USD 20 billion investment, wrote off USD 13 billion within six years. Although there continues to be substantial financing available from Wall Street, the focus has shifted from growth to cash flow. This has important implications.

But cheaper natural gas has had a positive impact in four areas:

Natural Gas and Oil Pipeline Projects

Natural gas and oil pipelines (midstream) have had a resurgence of activity, both proposed and built. To be sure there have been and continue to be strong challenges by environmental organizations. However, many pipelines have gone forward and others have been suspended because of economics rather than protest.

The U.S. went from an importer to an exporter of liquified natural gas. (Source: The Globe and Mail)

New LNG Facilities

LNG exports are a new phenomenon for the US. For years the US faced a deficit in natural gas, leading to proposals for nearly 40 LNG import facilities. Fortunately, most of them were not built, and those that were have largely become LNG export terminals. These required massive capital investment across the value chain. Greenfield facilities are now planned or under construction in multiple locations.

Expansion of Pipelines to Mexico

Pipeline gas to Mexico is little noticed by the public but the expansion has been dramatic. Despite the liberalization of the energy system in Mexico the demand for natural gas for industry and consumers, especially in Northern Mexico, is likely to continue. There is even talk about an LNG export terminal in Mexico’s Baja peninsula, to be supplied from US sources. The shadow over this is anti-immigrant policies of the Trump Administration and uncertainties related to the renegotiation of the NAFTA trade agreement. There is concern that the upcoming Presidential election in Mexico will result in an anti-US tide that might impact progress on the energy value chain.

Resurgence of the Petrochemical Industry

The petrochemical industry in the US has had a resurgence with low-cost natural gas. Approximately USD 100 billion of investment is currently underway or recently completed in the Texas and Louisiana Gulf Coast.

What we see here are currents moving in very different directions in the extended and complex energy supply chain in the US and internationally.

What does this mean for the steel industry?

Pipelines

Steel is literally the backbone of the US oil and gas system. Hundreds of thousands of miles of pipelines form a complex web across the continental US, in Alaska, to Canada and Mexico, and out to the Gulf of Mexico. Though mostly unseen, these pipelines enable the production and consumption of resources reliably and at affordable prices. New activity will be limited in the Gulf of Mexico for some time, with most of it focused on completing projects that were already underway. There may be some new activity in Mexican waters in the Gulf as the political opening there results in development, much of it in proximity to known fields on the US side of the border.

For example the Keystone XL pipeline, planned to bring more heavy oil from Canada, has been contentious for years for a variety of reasons including the higher carbon content of the crude and the route of the pipeline. Opponents have recently adopted a new strategy suggesting that the project is no longer economic – this is a way to undermine political support. TransCanada, the developer, insists that it is viable and on track. However, in Canada itself, plans have been abandoned for a massive oil pipeline to connect the producing area of Alberta in Western Canada to the east coast.

The Keystone XL pipeline was planned to bring heavy oil from Canada to the U.S. (Source: Horizon Supply Company)

Platforms

The offshore industry has been a major user of steel, both for platforms often built in Korea, and also for the related supply chain. Capital investment has been hardest hit in this area, and may not resume for 3-5 years until global demand increases and production growth slows.

LNG Facilities

LNG is a relative bright spot. The value chain includes the production of gas, transportation to newly-built liquefaction facilities, LNG ships, and import/regasification facilities. Lithuania recently built an LNG import facility to promote its independence from Russia. In other cases, majors like Shell, are now discussing building infrastructure in countries as diverse as South Africa and Vietnam so that they can become gas users. Japan shut its nuclear facilities after Fukushima and has been slow to reopen them. It lacks a domestic pipeline system because of the mountainous terrain and has relied on two dozen LNG import terminals. Will that create demand for new facilities?

An interesting twist is that Kinder Morgan, a leading pipeline company, has defined itself more broadly as an energy transfer organization. It had been frustrated in trying to build a natural gas pipeline from the Marcellus field in Pennsylvania to Boston, where natural gas prices are often the highest in the US. So they have decided to build LNG vessels to transport gas from terminals in Louisiana and Texas to Boston, despite restrictions imposed by the protective Jones Act that requires US vessels and crews for transport between US destinations.

LNG vessels transport LNG between terminals. (Source: World Maritime News)

Shale Gas Wells

The US shale play has been compared to a manufacturing process. Traditional development wells were expected to produce gas for years and oil sometimes for decades. But the fracking operations have a rapid decline curve which means that companies are constantly drilling new horizontal wells and are doing so for greater lengths. More than a dozen horizontal wells may stretch from a single pad. Budgets are now focused on cash flow, which means spending less on acquiring leases and more to produce oil – this results in more spending on steel.

Crude Oil Vessels

The US is now exporting about 2 million barrels of oil per day. US producers had been largely banned from exporting oil until two years ago when outdated legislation was changed. Increased domestic production and the ability to export dramatically changed shipping patterns. Nigeria had been a major exporter to the US but has forfeited the market. Saudi Aramco bought out Shell’s interest in the Motiva joint venture and took complete control of the Port Arthur refinery, the largest in the US. Many observers believe this was to assure a market for Saudi crude. Thus increased trade in oil and shifting markets may create demand for new vessels.

Petrochemical Facilities

Finally, low-cost natural gas has been a constant in the US. In addition to the new construction of petrochemical facilities along the US Gulf Coast mentioned previously, it adds the potential for a reindustrialization of the US economy that was unimaginable just a few years ago. This can cut across many industries for which power costs are a major factor. This may seem inconsistent with e-commerce, but the two may go together as mega distribution centers are built so that a growing fleet of trucks can provide same-day delivery to consumers.

There are many paradoxes in the American energy system and supply chain. For the steel industry, the key is to determine where those opportunities are located.

Bill Arnold is a professor in the practice of energy management at Rice University’s Jones Graduate School of Business. Previously, Arnold was Royal Dutch Shell’s Washington director of international government relations and senior counsel for the Middle East, Latin America and North Africa for 16 years.

Cover photo courtesy of Petroleum Economist.

Nam Tae-Gyu in his early days on site at a POSCO steel mill.

Nam’s Battle with the Sublance

Five years into his first job ever, Nam hit his first hurdle. The sublance used for detecting temperature and carbon levels of ingot iron in the converters kept breaking down. The brutal process for replacing the sublance probe took a physical toll on the workers and Nam remembers frequent nosebleeds and extreme fatigue vividly.

Nam explained, “Pure iron is converted into steel in a smelting process that requires 1700 °C of heat and oxygen incorporated into the ingot iron. When the process is 80 percent done, a sublance goes into the ingot iron inside the converter to take temperature and carbon measurements. Then, it sends the data to the operating room. With that data, the operator decides if the process should be continued or stopped. Afterwards, a sublance goes into the post-steelmaking converter again, measures the temperature and the amount of carbon, and then sends that data to the operator one last time. The data is used for the slab and bloom making processes as well. In a way, the sublance acts as an important key that decides the final quality of the steel. So if the sublance doesn’t work properly and sends the wrong data to the operator, there will be a tremendous loss.”

A sublance, which has to be inserted about 1 meter deep into the ingot iron, has a 2-meter probe with a sensor measuring the temperature and carbon and oxygen components. This disposable probe stays in the 1700 °C converter for 5 seconds and transmits the data to the monitor of the operating room through a cable inside the sublance pipe. The problem is that the travel distance of the sublance changes whenever a new probe is equipped. For that reason, facility managers must check the accurate position and adjust the length on every occasion. The sublance had to be adjusted at the top of a 7-story steel mill that is 20 meters higher than the top of the converter. To make it worse, technicians had to physically climb up and down dozens of times for 3 hours to alter the length manually if the lift didn’t work.

Liquid ingot iron in a steel mill during the smelting process

Nam’s First Masterpiece

Nam knew there had to be an easier way. After studying the sublance diagram and its instruction manual, he finally had an “aha moment.” He installed a digital location detector in an encoder form that could receive data to determine the travel distance of the sublance from a cambox instead of a touchbar that bred most of the errors in the previous system.

This allowed digital information on the travel distance of the sublance to be sent directly to the operator who in turn could locate the probe accordingly. This alone reduced errors in the data for every probe change. Furthermore, Nam even installed a detection system to eliminate all errors of the previous touch bar.

In the end, the improved sublance allowed 2 people to finish in 10 minutes what 3 people had to work on for 3 hours previously. The measurement success rate increased from 87 to 95 percent and lead to cost reductions and a shorter operation time overall for the smelting process.

Another Hurdle, Another Masterpiece

In 1997, Nam met his second and biggest challenge of his time at POSCO. A converter tilting device that could tilt and rotate a 1300-ton converter broke down. No one expected this machine to malfunction, as it was made with certified parts with advanced technology brought in from Japan. The Japanese supervisors kept the device’s technology a secret for copyright reasons, so the Korean technicians didn’t know the inner workings of the machine.

The complex device was composed of four motors, reducers, inverters and other parts. In order to run the motors, they had to use a magnetic contactor and high-voltage circuit breaker, both imported from Japan and extremely expensive since they had a short lifespan.

“One time, a large amount of electric current spilled on the converter tilting device. A severe arc was generated and melted the magnetic contactor, causing equipment failure and a KRW 200 million loss. I tried to replace the contactor with a domestic model to improve it, but in the process, the electric current flowed to the field motor, and the electric arc leaned causing molten steel to leak. We had to stop all operations for 14 hours and ended up with 15 tons of leaked steel.” Nam recalls.

A converter holding molten steel being tilted

It was a dark moment for Nam and POSCO, but it only prompted him to work harder towards a solution. After much research, trials and failures, he developed a vacuum magnetic contactor made of domestic parts and applied a vacuum breaker to the tilting device, thus localizing the core parts of the converter tilting device. Also with the new technology, temperatures could be monitored at the bend, cable crossing point and cable access point for a real-time monitoring system for accident prevention. Nam not only raised POSCO’s production quality to global standards, he helped reduce quality deviation and eliminate waste.

Working Philosophy/ Results

Looking over his achievements at POSCO, it is easy to see why Nam was named a 2017 POSCO Master. In the past 40 years, he accomplished 15 patents, 32 outstanding proposals, 1830 general proposals and 156 knowledge records. Nam received the highest award of job competence, the Steel Mill Proposal King award, this year’s Person of Pocheon award, Korea’s Quality Manager award and was named a POSCO Master in 2014.

Nam Tae-Gyu walks through the fire prevention system at POSCO’s Steel Mill 1 with executives and employees.

Nam’s working philosophy is simple. Achieving the best results in steelmaking and maintenance requires hard work and passion, much like how a good harvest requires the sweat and blood of the farmer. With this in mind, Nam’s curiosity is unending as he continues to look for improvements and leave behind a legacy of hard work and dedication.

POSCO CEO Kwon Ohjoon is seen firing up Pohang Blast Furnace No. 3 at the ceremony held on June 6 in Pohang, Korea

Renovations for the blast furnace began on February 24 when POSCO added automated monitoring technology to control the internal state of the blast furnace, a measure expected to help forecast and extend its lifespan. This led POSCO to develop an infrastructure that utilizes artificial intelligence and collect big data from early stages of operation, bringing it one step closer to becoming a “smart blast furnace.”  

Distinguished guests, including POSCO CEO Kwon Ohjoon, are seen powering on the blower switch in the operating room of Pohang Blast Furnace No. 3

In addition to incorporating smart technology, the internal volume of Pohang Blast Furnace No. 3 was expanded from 4350㎥ to 5600㎥, making it the 5th largest in the world, with a capacity to produce 15,000 tons of molten steel in a single day. POSCO now operates 5 of the 14 super-sized blast furnaces in the world, including the world’s largest Gwangyang Blast Furnace No. 1 (6000㎥), Pohang Blast Furnaces No. 3 and 4 (5600㎥) and Gwangyang Blast Furnaces No. 4 and 5 (5500㎥). The remaining blast furnaces are in Japan (four), China (three), Russia (one), and Germany (one).

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Volunteer activities include helping to improve housing conditions for underprivileged neighborhoods, baking, painting murals, and mentoring the local youth. On May 30, POSCO CEO Ohjoon Kwon and over 30 employees will visit Myeongryundang of Sungkyunkwan Munmyo (a Confucian shrine) and help repair and replace the Changhoji (traditional Korean paper made from mulberry bark for doors and windows).

POSCO hosts the “’2017 POSCO Global Volunteer Week” from May 24-30. This photo shows POSCO CEO Ohjoon Kwon and other employees volunteering during last year’s Global Volunteer Week.

Volunteer activities will also take place in the various countries where POSCO Group branches are located (China, Japan, Thailand, Vietnam, Indonesia, Mexico and Poland). Volunteer activities are customized for local communities and range from improving and repairing the welfare facilities in slum areas to cleaning up the environment and setting up cultural activities for disabled children.

Not only does POSCO ask its employees to help strengthen the community through the Global Volunteer Week, but it also contributes to the POSCO 1% Sharing Foundation to assist those in need.

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In the journal’s last installment of a special four-part series on Industry 4.0, Dr. Kyeongchan Kim, POSCO’s Vice President of Corporate Strategy Development, delves into the impact of e-commerce in China’s steel industry.

China’s Industry 4.0

When the “dot-com” frenzy took over the world in the late 1990s, the first steel e-commerce boom began, with major steel-producing countries such as the USA, Japan, European-countries and Korea leading the trend.

However, this wave was short-lived. Transactions reflected inadequacies between online and offline steel trade, and entry barriers were raised for traditional distributors.

Fast forward ten years later, and a second steel e-commerce boom begins in China. The rapid growth in China’s steel e-commerce can be attributed to three factors: the receptive landscape of the country’s steel trading market due to an industry slump; the “Internet Plus” and the “Made in China 2025” policies; and a growing desire for online expansion across the industry.

In 2015, the number of participating platforms in steel e-commerce in China and trade volumes have almost doubled from 2014’s statistics, characterizing the exponential rise in online steel sales.

E-Commerce Boom

Unlike other major steel producing countries, however, experts are claiming that China’s market has distinctive features that differentiate it from being a passing fad, like the previous boom.

Profitability has been a major concern for Chinese steelmakers, as the number of steel manufacturers and distributors has grown independently, creating fierce competition and adding to the country’s oversupply of steel.

Therefore, many companies have turned to e-commerce to increase their clout, while distributors, venture capitalists and information consultants have utilized this strategy to reinforce their footholds in the market and pursue new business opportunities.

Currently, there are five steel firms in China that account for 90% of the total steel e-commerce trade: Zhaogang, Banksteel, Opsteel, Xinyilian and Ouyeel.

Future Sales Overseas

In the future, it is predicted that China’s steel e-commerce market will be led by a few firms, which will eventually restructure the overall steel industry in China. Oversupply will be gradually reduced, fledgling and floundering businesses will close and the economy will stabilize.

The Chinese government is an influential presence in this restructuring, and aims to increase the total steel trade through e-commerce by about 20%, or 150-200 million tons.

Currently, most of China’s steel e-commerce firms are trying to shift the model of inventory sales to order sales to expand the implementation of the “Made in China 2025” and “Internet Plus” policies, upgrading their general steel products to those of higher quality.

To broaden their sales channels, major Chinese steel e-commerce companies are branching out to export in other countries, such as Korea, Vietnam, Thailand and Dubai.

Steady Climb in Emerging Markets

If China’s Industry 4.0-style policies do take hold in the steel industry, its steel e-commerce will most likely be more than just a fad. The size of the market, business opportunities and profitability especially reflect this trend’s direction.

By first focusing on becoming the main distribution channel for general steel products domestically, China’s e-commerce firms will incrementally take hold of overseas markets, particularly emerging ones.

Chinese platforms understand that steel e-commerce will not spread as quickly abroad as it did in their own country, and will seek gradual expansion through traditional and digital business integration.