POSCO Group to invest $93 bn by 2030 to build hydrogen reduction steel plant

A celebratory event commemorating the establishment of Posco’s first steel unit in Pohang, North Gyeongsang Province, on July 3. [Photo provided by POSCO]

POSCO Group, owner of South Korea’s biggest steel mill, announced plans Monday to invest 121 trillion won ($92.6 billion) by 2030 to build a hydrogen reduction steel plant and a secondary battery production complex, in celebration of the 50th anniversary of its first steel unit at Pohang Steelworks.

“The past 50 years have been a great challenge for POSCO to drive Korea’s economic growth with steel business,” said Choi Jeong-woo, chief executive officer of POSCO Holdings, at a celebratory event. “POSCO Group will lead a sustainable future for humanity through growth centered on eco-friendly steel and secondary battery materials.”

POSCO did not disclose the details on the investment but it will likely focus on building a hydrogen reduction steel production facility by reclaiming land from the sea near Pohang Steelworks, according to sources.

The company plans to invest 40 trillion won for reclamation and construction of a hydrogen reduction steel plant by 2050. Of the entire 121 trillion won investment, POSCO is expected to spend about 30 percent in the production of eco-friendly steel, including hydrogen-reduced steel.

POSCO’s decision to build a hydrogen reduction steel plant by reclaiming the sea area comes as the 9.5 million-square meter site at Pohang Steelworks is already in full use.

The company has opted to build a new site also because converting the existing blast furnace-based facility to one that produces hydrogen reduction steel may disrupt the entire steel production for a while.

Earlier, POSCO had secured 2.3 million square meters of new land by reclaiming the sea between the Gwangyang Steelworks in South Jeolla Province and Donghoan site on the east coast. The company has decided to expand Pohang Steelworks in the same method.

POSCO is going all-out on hydrogen reduction steel as regulations on carbon emissions from the manufacturing process are increasingly tightening in developed countries, including the European Union‘s Carbon Border Adjustment Mechanism (CBAM).

Hydrogen reduction steelmaking refers to the process of injecting hydrogen into iron ore to extract direct reduced iron, which is pure iron.

Unlike blast furnace-based production which generates carbon dioxide during the steel production process, pure water is generated as a byproduct.

The area to be reclaimed from the coast of Pohang, where the hydrogen reduction steelmaking facility will be built, is about 410,000 square meters, one-seventh the size of the current Pohang Steelworks.

POSCO plans to complete site preparation including land reclamation by 2041 and begin full operation of the hydrogen reduction steel facility in 2050.

However, the plan has not yet been approved by the Ministry of Land, Infrastructure, and Transport, as well as local governments of North Gyeongsang Province and Pohang City. POSCO will soon hold a joint briefing session with residents to collect feedback.

POSCO also plans to invest 73 trillion won, or 60 percent of the 121 trillion won, in the regions of Pohang and Gwangyang. POSCO Research Institute estimates that the investment will generate domestic production worth 121 trillion and create 330,000 jobs annually.