Chairman Chang: “Global collaboration must be expanded for low-carbon steel production process development and carbon reduction”

Visited the onshore gas field group company, Senex Energy… Inspected the global energy value chain business, including natural gas development

POSCO Group Chairman In-hwa Chang embarked on a three-day global management tour to Australia starting April 7 to strengthen steel business competitiveness and energy value chains.

Chairman Chang attended the World Steel Association’s first-half regular meeting in Sydney, Australia, and met with global steel company representatives to discuss international steel business issues, including the integrated steel mill in India and technological development cooperation plans. He then moved to Senex Energy’s gas field in Queensland to inspect the natural gas upstream business site.

At the World Steel Association Executive Committee meeting held on April 7, Chairman Chang represented the Korean steel industry in discussions about major issues facing the global steel industry, including carbon reduction. He suggested development directions for key agenda items of this executive committee meeting, including △ environmental improvement effects of low-carbon processes and △ global standardization of carbon emission measurement criteria.

The World Steel Association is a global organization established with the goal of mutual understanding and development in the steel industry, with a total of 157 member companies, including steel companies worldwide, regional steel associations, and research institutes.

That day, Chairman Chang emphasized the need to expand global cooperation at the association level in the field of low-carbon processes, stating, “As global steel companies are pursuing the development of various carbon reduction technologies, we must expand collaboration among global steel companies for the development of low-carbon steel production processes, carbon reduction, and expansion of future demand.”

In particular, Chairman Chang also sought new opportunities by meeting with CEOs of global steel companies to overcome the uncertain global steel industry environment and to cooperate on joint ventures and technology development. He had multifaceted discussions with Jayant Acharya, President of India’s JSW Steel, about integrated steel mill joint ventures. He consulted with Liu Jian, Co-President of China’s Hesteel Group, on ways to strengthen cooperation for joint ventures currently operating in China.

▲POSCO was selected as a Sustainability Champion for the fourth consecutive year. From left: Edwin Basson, Secretary General of the World Steel Association; In-hwa Chang, Chairman of POSCO Group; Narendran, Chairman of the World Steel Association and Chairman of Tata Steel.

At the World Steel Association members’ meeting held the next day, POSCO was selected as a Sustainability Champion for the fourth consecutive year. With this award, POSCO once again solidified its position as a leading company in the ESG field in the global steel industry.

▲POSCO Group Chairman In-hwa Chang (second from left) inspects operations at Senex Energy’s gas field in Queensland, Australia, on April 9.

Subsequently, Chairman Chang visited the Senex Energy gas field site in Queensland, Australia, on the 9th. Senex Energy is an onshore gas field representing the upstream portion of POSCO Group’s natural gas business, which was acquired by POSCO International in 2022 for 442.42 million Australian dollars (approximately 400 billion won).

Senex Energy is pursuing a project to expand natural gas production from an annual 20PJ (petajoules) to 60PJ (equivalent to approximately 1.2 million tons of LNG) by 2026. Once the production expansion is completed, it is expected to supply 10% of eastern Australia’s domestic natural gas demand.

Meanwhile, as Chairman of the Korea-Australia Economic Cooperation Committee, Chairman Chang contributes to close economic cooperation and industrial competitiveness enhancement between the two countries, beyond traditional resource sectors such as minerals and energy, to future business areas.

The production expansion plan announced in 2022 is progressing smoothly, with gradual expansion set to begin in the latter half of 2025

Starting in 2026, the company will supply 10% of Eastern Australia’s gas demand, establishing itself as a leading energy company in Australia

POSCO INTERNATIONAL (CEO Lee Kye-In) is successfully executing its production expansion plan via its subsidiary, Senex Energy, bearing the fruit of its growth in natural gas operations in Australia.

On the 24th, the company held a ceremony to mark the completion of Gas Processing Facility Unit 1 at the Senex Energy Atlas Gas Field in Queensland, Australia. Susan McDonald, Senator of Australia and Shadow Minister for Resources, attended the event alongside other Australian government officials. Also present were POSCO INTERNATIONAL CEO Lee Kye-In as the representative of Senex Energy’s joint shareholders and Gina Rinehart, Executive Chairman of Hancock Prospecting.

In 2022, POSCO INTERNATIONAL acquired Senex Energy in collaboration with Hancock Prospecting and announced a plan to triple its annual natural gas production from 20 petajoules (PJ, an SI unit for calorimetry) to 60 petajoules. 60 petajoules of natural gas is enough to produce 1.2 million tons of LNG.

Senex Energy, situated in eastern Australia where energy demand is concentrated, plays a crucial role in ensuring a stable energy supply for the region. The Australian Competition and Consumer Commission predicted in its ‘Eastern Australia Gas Inquiry’ (published in June) that a domestic gas supply shortage could occur as early as 2027.

In 2023, to expand its gas production, Senex Energy signed long-term gas supply contracts of up to 10 years with eight buyers for approximately 151 petajoules (PJ) of gas, securing profitability and helping to address the domestic gas supply shortage.

The gas processing facility now entering test operation is crucial infrastructure for gas sales, as the natural gas produced is purified to remove foreign matter, compressed at high pressure, and transported through pipelines to be sold to power plants and city gas services in Eastern Australia.

The completion of Gas Processing Facility Unit 1 marks a significant milestone, showcasing the steady progress of the production expansion project as planned. Senex Energy is currently engaged in several projects―including drilling 280 production wells, constructing two more gas processing facilities, and building gas pipelines―with the objective of completing the production expansion by the end of 2025.

POSCO INTERNATIONAL aims to finish the test operation of Gas Processing Facility Unit 1 and its associated gas pipelines by the second quarter of 2025, followed by gradual sales of the expanded gas production. The company is also on track to operate the Gas Processing Facility Units 2 and 3 in the latter half of 2025 to carry out its production expansion plan without a hitch.

The company anticipates that by 2026, when the planned production expansion is completed, the supply will increase to meet over 10% of the domestic gas demand in Eastern Australia.

n her commemorative speech, Susan McDonald, Senator of Australia and Shadow Minister for Resources, stated, “Eastern Australia is in dire need of a stable power supply, reduced energy costs, and job creation.” She added, “We must bring our abundant gas resources to the domestic market with haste, as Senex Energy is doing today. This requires more new exploration permits and bigger investments.”

POSCO INTERNATIONAL CEO Lee Kye-In remarked, “Today’s event signifies that Senex Energy is poised to become a leading energy company in Australia. POSCO INTERNATIONAL will continue to support Senex Energy to ensure the safe completion of its production expansion projects.”

Drilling of additional production wells and expansion of infrastructure is in full swing to triple production

The company plans to operate an annual 60 petajoule (PJ) production system starting in 2026

Stable demand has already been secured through the signing of long-term local supply contracts

In addition to production expansion, the company will also focus on securing potential reserves through drilling for exploration mines

POSCO INTERNATIONAL (CEO Lee Kye-In) is speeding up its expansion of the natural gas business in Australia by making timely investments in its subsidiary, Senex Energy, to boost its production expansion plan.

On March 31, the company decided through its board of directors to participate in a capital increase for its subsidiary, Senex Energy, jointly with its partner Hancock Energy. The two companies will invest a total of AUD 650 million (approximately KRW 600 billion) to build an annual 60 petajoule* (PJ: international unit of measurement of energy consumption) production system by 2026.

POSCO INTERNATIONAL will contribute AUD 326 million (approximately KRW 300 billion) to this capital increase, based on its 50.1% stake in Senex Energy. 60 petajoules (PJ) is enough to produce 1.2 million tons of LNG.

The approved investment will be used to drill additional gas production wells and build gas field production facilities, including gas processing facilities and pipelines.

This investment aims to speed up the company’s plan to triple natural gas production, which was announced in July 2022, as the supply of natural gas in eastern Australia is expected to gradually decrease. The Australian government also released its Future Gas Strategy on the 9th of last month, emphasizing the importance of natural gas in achieving carbon neutrality by 2050 and committing to its continued development.

Additionally, Senex Energy has secured long-term gas supply contracts with Australia’s largest electricity generation company, AGL, as well as with BlueScope, Liberty Steel, and other companies for 151 PJ of gas to ensure profitability after increased production.

Senex Energy, an energy company that produces and develops natural gas in eastern Australia, has experienced rapid growth since becoming a subsidiary of POSCO INTERNATIONAL in April 2022. Before the acquisition, Senex Energy was producing 19.6 PJ of natural gas, gaining AUD 26 million in operating profit in 2021, but in 2023, it produced 26.9 PJ of natural gas achieving AUD 58 million (approximately KRW 53 billion) in operating profit, thus contributing to improving its parent company’s performance.

By 2026, when the incremental gas will be supplied to eastern Australia, Senex Energy is expected to generate more than KRW 600 billion annually in sales, contributing significantly to the parent company’s increased profit.

Furthermore, Senex Energy plans to focus on securing additional reserves by not only expanding production from existing gas fields but also drilling exploration wells. In July of this year, drilling will be conducted in the Rockybar exploration mine in eastern Australia, and with its 50% stake in the Range evaluation, Senex Energy is expected to maintain a stable gas business through further continuous development even after this development for expansion.

Meanwhile, Hancock, an Australian resource development company partnered with POSCO INTERNATIONAL as well as an owner of the Roy Hill mine, has been successfully operating its business through a joint investment with POSCO and is expanding its collaborative partnership into energy business by jointly acquiring Senex Energy with POSCO INTERNATIONAL in 2022.

Last month, Hancock executives visited POSCO INTERNATIONAL’s office in Songdo and met with key executives, including CEO Lee Kye-In, to support the expansion of investment for production and to have in-depth discussions on joint investment in energy projects in Australia and overseas, building on the trust between the two companies.