Global protectionism and armed conflicts have intensified geopolitical risks, amidst which resource dominance and energy supply chains are fast becoming essential projects directly linked to national security. In this shifting global dynamics, POSCO group seeks to enhance its competitive profile by building supply chains across steel, materials, and resources and extending its reach to include lithium, LNG, and rare gases. In a recent interview with 3PRO TV, Dr. CHANG In Hwa, CEO of POSCO HOLDINGS, shares his insights on the missions and strategy of the business group in an age that augurs massive realignment of the global supply network.

PART 01

CHANG In Hwa The two most significant shifts that occurred during the past five years are AI Transformation (AX), driven by the uptake of AI, and the Green Transformation (GX)*. These developments are likely to continue in the years ahead. In addition, the fragmentation of global supply chains has emerged as a key global issue, which was aptly discussed during the World Economic Forum (WEF) in Davos. This is not a challenge faced by Korea alone, but a global phenomenon that has been aggravated by the Russia-Ukraine war and the US-Iran conflict. When supply chains that deliver resources and materials are disrupted, all industries may suffer the impact. Ultimately, how we respond to supply chain fragmentation will shape the future of national economies, the global economy, and the survival of private businesses.

*Green Transformation (GX): A strategy to reform economic and social systems to become more environmentally sustainable, to reduce greenhouse gas emissions and address the climate crisis.

▲ CHANG In Hwa, CEO of POSCO HOLDINGS, presents the group’s business portfolio strategy at the ‘CEO Investor Day’ event organized on July 2.

CHANG In Hwa As a business group, POSCO values not only the growth of its own operations, but also the impact we project onto other economic activities. What was presented at Investor Day is the new direction to be sought by POSCO group. Previously, we served other domestic industries by supplying steel; going forward, we wish to offer a wider variety of materials that will serve future industries, such as AI and robotics. To that end, we seek to stretch the scope of our business portfolio to include Strategic Resources, represented by lithium, as well as Energy Resources. My vision for POSCO group is to sustain our heritage as the backbone of national industrialization by continuing to serve as a vital base that supports the Korean society.

CHANG In Hwa “Guardian” appropriately captures the role that POSCO group seeks to fulfill. The very first batch of molten iron was produced at POSCO using iron ore acquired through a long-term supply agreement signed with Hamersley, an Australian mining company. Additionally, by binding a 20-year agreement, we have secured reliable LNG supply from Indonesia’s Tangguh region, helping to strengthens our competence. In Korea, we don’t simply import energy and mineral resources; we take extra steps to add value to these commodities. Hence, we make additional investment and process them into value-added products. This is where POSCO group outshines its peers with unrivaled capabilities. Because these operations require massive CAPEX, every decision must be backed by technologies proven through strong R&D skills. It is my firm belief that POSCO group is the de facto No. 1 company among Korea’s process industries.

CHANG In Hwa We were the first among Korean companies to sign a contract with Tangguh LNG. We have our own LNG infrastructure, including storage tanks and port facilities. To deliver on our business diversification strategy, we acquired energy companies—Daewoo International and Hanwha Energy.

In the interest of reliable energy supply, LNG needs to be given greater consideration. In the past, LNG had only a handful of users, namely Taiwan and Japan. But the Russia-Ukraine war unveiled that PNG, albeit inexpensive, does not offer the best energy solution. The world is now beginning to feel the need shift to LNG-based natural gas supply.

Our business consumes LNG, but we do more. We also transport, spot trade and invest in midstream operations with the goal to assist in making LNG dependable and reliable in Korea. Additionally, LNG turns into power very quickly. With soaring power demand triggered by advances in the AI industry, LNG offers the ideal solution to compensate for the limitations of nuclear, coal-fired and renewable energy sources.

Australia is a living example. Given the abundance of wind and solar resources, Australia initially aimed to shift to a renewable energy-based power system. But they had to change their mind. Due to the intermittency issue, additional investments became inevitable. Ultimately, they chose to use LNG as an interim “bridge” energy source. This example illustrates the vital role of LNG in national energy policies and to balance the energy mix.

PART 02

CHANG In Hwa“Irreplaceable” has deep resonance; I like what it implies. Materials draw the boundaries and limitations of what industries and economies can and cannot do. For example, once steel became widely available in the aftermath of the Industrial Revolution, the trajectory of industrial development was transformed. Likewise, in the rechargeable battery industry, lithium is the key material that determines the cadence of growth. Lithium is lightweight and allows electrons to transit quickly, making it the ideal battery material. That is why lithium occasionally breeds resource nationalism.

In line with these dynamics, POSCO group is extending its reach even farther than lithium to include rare earths and rare gases. Rare earths is particularly important. China has previously weaponized it  and countries reacted to the risk by building strategic stockpiles. We are moving beyond global resource risk mitigation; we are building a complete business value chain that begins from resource acquisition and extends into separation, purification and finished product manufacturing.

Let’s not leave out rare gases. Xenon, krypton, helium, and neon are indispensable gases for the semiconductor industry. Xenon is particularly crucial to the etching process applied to stacked devices, such as HBM. Along with krypton, xenon is vital to semiconductor manufacturing. Should their supply be disrupted, the entire industry can be exposed to significant risk.

POSCO operates oxygen plants as part of the Steel Works facility. POSCO Air Solution operates a plant to perform separation and purification to produce rare gases. Through this process, we can cover approximately 50% of current domestic rare gases demand. Furthermore, xenon is used in the aerospace industry. Due to its high atomic mass and ionization efficiency, the gas is deemed ideal for manufacturing space propellants, such as satellites and rockets. Its strategic value is expected to grow.

PART 03

CHANG In Hwa I joined POSCO group through RIST. When I made my first visit to the steelworks, I was struck by the slogan displayed at the main gate: “Resources are limited, creativity is unlimited.” The phrase left a lasting impression on me. I immediately recognized the monumental importance of creativity and technology at POSCO.

*RIST (Research Institute of Industrial Science & Technology): POSCO group’s specialized applied research institute, established in 1987.

To expand into the global market, we focused on developing automotive steel, which consist of products that require the most advanced technologies. It took about five years to enter the markets. Today, we supply to key global OEMs, including Toyota, GM, and Mercedes-Benz. I should note that each automaker requires their own specifications. How are we able to meet the widely varying needs? That is precisely where we have been able to prove our technological worth as well as our ability to design and control the manufacturing process. What distinguished us as Global No. 1 is none other than our technology.

PART 04

CHANG In Hwa In the process industry, AI is a vital component that consolidates accumulated knowhow and unspoken knowledge* to fine-tune operations for the desired outcome. As a business group, POSCO has been integrating AI for 10 years; we have encoded implicit data into AI and we have come a long way. Unlike assembly industries, steelmaking handles molten metal in motion and various other materials that pose additional risks to implementation of Physical AI. Despite these challenges, I am confident we can prevail against our Chinese peers.

*Unspoken knowledge, a.k.a., tacit knowledge: Knowledge accumulated through personal exposure, experience and learning that is difficult to articulate explicitly through spoken words or in writing.

When I applied for the CEO position, I laid bare my vision. I expressed my desire to see POSCO group as an OEM company that demonstrates world-class operational excellence and one that globally develops, produces, and markets products under the POSCO brand. At the center of this vision is AI. History witnessed manufacturing hubs transition from Japan to Korea and then to China. However, but all the profits went to Europe, from where technology originated. However, AI can change this dynamic. Language barrier will vanish and software will enable rapid installation, operation, and optimization. Once AI is deployed, manufacturers will quickly evolve into a software company and even a business operator. AI is the heart of this transformation.

CHANG In Hwa During my tenure as CTO, POSCO was named a Lighthouse Factory by the WEF. It was in the early phase of the program, having named fewer than ten Lighthouse factories worldwide. POSCO made the early list recognized for its AI-driven innovation.

*Lighthouse Factory: A factory recognized by the World Economic Forum for leading innovation in global manufacturing through the adoption of key Industry 4.0 technologies. In 2019, POSCO was the first company in Korea to be named a Lighthouse Factory.

PART 05

CHANG In Hwa When our founder established POSTECH, he created the “Nobel Garden,” a patch of land designated for Nobel prize winners. Pedestals were built to celebrate future Korean laureates. However, Korea has yet to produce a Nobel prize winner in science and technology. I believe that through close cooperation among POSTECH, RIST, POSCO, and the industry, we will produce one. Japan has also produced Nobel laureates through strong industry-academia collaboration. With this vision, POSCO and RIST are working with promising researchers, whose work has appeared in Nature*, to advance science and future technologies. An example is the metalens**, on which both POSCO and RIST are working to take to industrial-scale production. I hope to put my support behind these efforts to the best of my ability.

*Nature: A prestigious multidisciplinary scientific journal recognized as the world’s top three scientific journals (along with Science and Cell).
**Metalens: Next-generation ultra-thin lens that controls how light is focused by arranging subwavelength nanostructures on a flat surface.

CHANG In Hwa Resources and materials are sectors that require long-term persistence and sustained commitment, making them particularly appropriate sectors for companies like POSCO that have a long history of accumulated expertise. Ten years from now, my vision for POSCO group is to be in the vanguard of global supply chains. To get there, we will have to expand our scope of operation beyond industrial resources to include strategic and energy resources.

CHANG In Hwa It is deeply meaningful to see Samsung Electronics and SK Hynix in the spotlight. They deserve to be celebrated. While few may remember, the very first ‘peoples’ stock’ in Korea was the POSCO stock. We were the first company to offer the opportunity to participate in raising capital for a public company to ordinary citizens. This was to make good on our commitment to share with the people our achievements as a state-owned enterprise. We take our history and legacy very seriously. With that solemn sense of responsibility, POSCO group will work even harder to remain a company worthy of national pride.

▼Watch 3PRO TV’s Special Interview with CHANG In Hwa, CEO of POSCO HOLDINGS