The world’s fifth-largest steelmaker, South Korea’s POSCO, will build two new electric arc furnaces (EAFs), in order to reduce CO2 emissions and aim for carbon neutrality. These furnaces are scheduled to start operations in CY’25. One unit will be installed at its Gwangyang Steel Works and the other at Pohang Steel Works.
The annual production volume of crude steel from these furnaces is likely to be several million tonnes because the aim is to promote replacement of blast furnaces with EAFs, as per a SteelDaily report.
Increase in ferrous scrap consumption
In addition, POSCO is planning to increase the ratio of ferrous scrap input in its blast furnaces, which will increase its consumption of the material. The company plans to increase its scrap procurement to about 4 mn t per year.
POSCO it seems will make every effort to reduce CO2 emissions by 20% by CY’30 and raise the amount of iron scrap usage thanks to the construction of its new EAFs. The amount of capital investment for this plan is set at 2 trillion won ($1.69 million).
Efforts to commercialise hydrogen reduction method
In addition to replacing blast furnace steel-making with EAF, POSCO is also making efforts to commercialise hydrogen reduction iron making, and has been operating its own FINEX (fine iron ore reduction) process for many years. The steel giant wants to fully implement its “HyREX” (Hydrogen Reduction) technology by CY’30. Regarding hydrogen production, it will invest 10 trillion won ($8.44 million) by CY’30 to increase the annual production to 0.5 mn t, aiming for an annual production of 7 mn t within 5 years.
Since funds are required for such CO2 reduction measures, the company’s focus is on improvement of its operating profit margin in its domestic steel business. The operating profit margin will be raised from an annual average of about 9% to 13% from CY’22 to CY’30.
Besides POSCO, other blast furnace mills are also expected to continue to switch production from their BFs to EAFs in order to reduce CO2 emissions and achieve carbon neutrality. Many have already started shifting to the cleaner production platform. On the other hand, supply and demand of ferrous scrap is expected to become even tighter in the future. As a result, scrap procurement is likely to be an issue in the near future.
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