New tech for steel is desperately needed

The bloc trend in the global steel landscape amid heightened protectionist trade policy could have huge repercussions on the Korean steel industry. Our steel industry must be vigilant.

Koo Ja-youngThe author is a former vice chairman of SK Innovation. Nippon Steel, Japan’s largest and the world’s No. 4 steelmaker, announced an all-cash $14.9 billion buyout of U.S. Steel last December. But the landmark deal faces major headwind as former President Donald Trump pledged that he would “absolutely” prevent the iconic U.S. steelmaker from falling in the hands of Japan if he were to be reelected. He said, “I would block it instantaneously. Absolutely,” promising more aggressive actions to protect U.S. industry and workers when he retakes the White House.

That “America First” agenda is not entirely Trump’s doing. Bill Clinton also pursued it 30 years ago. U.S. Steel and other American steelmakers filed antidumping charges against Korean competitor Posco in 1992. Despite Posco’s justifiable defense during the year-long investigation, the U.S. Department of Commerce ruled in favor of the American industry. As the managing director on Posco’s strategy at the time, I flew to Washington D.C. to plea for fairness in the review and penalty actions.

Trump and Clinton representing rivalling Republican and Democratic Parties are no different ahead of an election, as they would do anything to win voters over. Trump sells it as a blunt political motto, whereas Clinton took less overt methods. Since many of Trump’s campaign pledges go against Korea’s interests, we must ready ourselves with a preemptive understanding and response to international geopolitical developments.

The steel industry, liable for about 8 percent of global carbon emissions, won’t be able to achieve net-zero emissions by 2050. The survival of steel companies will hinge on a technology and production capacity compliant with harsh environmental regulations.

Various options are under review, two of which have been deemed sustainable solutions to carbon neutrality. One is carbon capture, utilization and storage while maintaining traditional blast furnace technology. The other is the combination of the technology for direct reduced iron (DRI) and electric arc furnaces (EAFs). The former demands high-level technology to capture, transport and store carbon with the effect of carbon reduction stopping at around 60 percent. The latter has already made strides in commercialization. If the DRI process replaces natural gas with hydrogen and uses renewably-sourced electricity, carbon emissions from steelmaking could be cut by up to 95 percent. The shift would mark a milestone paradigm change from the blast furnace that has dominated steelmaking for a century to a novel, green concept.

North Carolina-based Nucor is a steelmaking leader leveraging on DRI and EAF. The company which started out as a small furnace in 1969 has grown to be America’s largest and most diversified steelmaker through continued technology and management innovation. In 2016, it built the world’s largest DRI facility with annual capacity of 2.5 million tons. In 2021, it churned out the world’s first net-zero carbon steel.

It also announced a bold plan to lower the greenhouse gas emissions of its steel mills to 77 percent less than the current global average by 2030. The company could be a darling in the green age, when carbon neutrality could decide the core value of a corporation against climate change.

The company also entered a joint venture with Japan’s No. 2 steelmaker, JFE Holdings, to accelerate the development and production of high-value and specialized steel. If the merger of U.S. Steel and Nippon Steel materializes, the two countries could create a mighty alliance, giving traction to the rebirth of the U.S. steel industry.

U.S. Steel can leverage Nippon Steel’s cutting-edge technology and high-end steel production ability to hone its global competitiveness. In return, Nippon Steel can circumvent tariffs by producing steel products on U.S. turf and expand U.S. Steel’s electric furnace projects that took off in 2020 so as to pose a formidable challenge to Nucor. Their accelerated migration to clean energy sourcing could help them achieve their carbon neutrality goal earlier than anticipated. The bloc trend in the global steel landscape amid heightened protectionist trade policy could have huge repercussions on the Korean steel industry. Our steel industry must be vigilant.

Translation by the Korea JoongAng Daily staff.