South Korea: Posco scaling up EAF investments to cut down on blast furnace iron-making

South Korean steel giant Posco is planning to invest in one electric furnace (EAF) each for its Pohang and Gwangyang steelworks. The molten metal production capacity of the plants is 17 million tonnes (mn t) and 23 mn t, respectively.

The world's sixth-largest steel producer in 2020, Posco produced more than 40 mn t of crude steel in 2020.

The two steelworks are each expected to produce 2.5 mn t of hot metal annually with the aim of achieving carbon neutrality. It is unlikely that annual crude steel production will increase from the two facilities. Operations are likely to start from 2025.

2050 target

Posco has pledged to become carbon-neutral by 2050. It plans to utilise carbon risk as an opportunity, overcoming the inevitable need for CO2 emission. Through innovative technologies, such as CCUS (carbon capture, utilisation and storage), and hydrogen metallurgy, the company aims to equip itself with "low carbon competitiveness" to produce "green steel".

Posco's EAF investment is meant to achieve the '2050 Posco Carbon Neutral Vision'. The steelmaker is taking measures to reduce the proportion of molten iron produced in the blast furnace and replace it with an EAF. There is no plan to expand domestic crude steel production capacity and so it is highly likely that Posco will replace old facilities rather than expand crude steel capacity.

Rise in EAF investments

Leading steelmakers are actively investing in electric furnaces. The world's second-largest steel producer ArcelorMittal is planning to invest in an electric furnace with a capacity of 1.5 mn t in the USA, and is expected to adopt an electric furnace with a capacity of 2.5 mn t of DRI-EAF in Italy and India when it expands.

Japanese steel behemoth Nippon Steel is also planning to build a 1 mn t electric furnace after closing the Hirohita Works much like the US Steel, which has decided to build a 1.6 mn t EAF in the Texas plant. To increase production while reducing carbon emissions, global steelmakers are investing in electric furnaces to replace blast furnaces.

The Carbon Neutrality Committee in South Korea aims to replace domestic blast furnaces with electric furnaces, develop a hydrogen-reduction steelmaking method, and replace the blast furnace iron-making method. It seems Posco will have no choice but to invest in electric furnaces.

Boosting scrap usage

Simultaneously, Posco is also aiming to increase the proportion of scrap use. According to industry sources, the company is preparing a cooperative plan to recover high-quality scrap. In addition, as it may be difficult to operate a stable electric furnace with only the amount of scrap generated in Korea, it is expected that efforts will be made to increase imports and secure various raw materials such as DRI.

SteelMint recently reported that Posco has increased imports of hot briquetted iron (HBI) by a whopping 200% on the year.

As each country is actively investing in electric furnaces for carbon neutrality and invisible trade barriers such as carbon border taxes are increasing, it is predicted that the ability to source high-quality will determine the success or failure of steelmakers.

Hydrogen-reduced iron-making

Experts are of the view that Posco is moving slowly towards hydrogen-reduced steel in relation to its investments in EAFs. Investments need to be made for the development of Hyrex technology, Posco's hydrogen reduction iron-making method that produces DRI in a fluidised reduction furnace and produces molten iron in an electric furnace.

Although the company has not yet confirmed the timing and scale of introduction of Hyrex, Posco's efforts to achieve its carbon-neutral goal are taking shape in the short term from the expansion of scrap usage, cooperation to develop pellets with iron ore companies, and investment in EAFs.