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According to the Ministry of Industry, Trade and Resources of South Korea LR/EH32 STEEL on June 26th, the South Korean government has officially approved the feasibility study of the "Hydrogen Reduction Steelmaking Demonstration Technology Development Project", planning to invest a total of 814.6 billion Korean won (approximately 600 million US dollars) between 2026 and 2030 to promote the research and demonstration construction of hydrogen based steelmaking technology. Among them, the government has invested about 308.8 billion Korean won, and the project is jointly promoted by the industry, academia, and research institutions.
The project will construct a demonstration factory with an annual output of 300000 tons, using low-cost and abundant powdered iron ore and hydrogen to produce hydrogen reduced iron and molten iron. In addition, relevant sub projects will be carried out to explore the feasibility of using hydrogen reduced iron in existing electric furnaces for small and medium-sized enterprises. The Ministry of Industry stated that the project goal is to gradually transform the traditional blast furnace ironmaking process into hydrogen reduction steelmaking process based on independent technology.
The technical LR/EH32 STEEL foundation of this demonstration project is mainly the FINEX process jointly developed by POSCO and Primetals Technologies in South Korea. This process can skip the traditional raw material pretreatment step and directly refine fine ore and bituminous coal into molten iron, which has cost advantages and environmental potential.
Among Asian countries, South Korea is the second country after Japan to establish government special funds to support the transition to low-carbon steelmaking. Japan announced its "Green Transformation Policy" as early as February 2023, setting up a fund with a total scale of 150 trillion yen (approximately 1 trillion US dollars) to support multiple key emission reduction industries, including steel. Nippon Steel and JFE Steel have launched electric furnace capacity expansion projects.
Despite continued policy efforts, industry insiders point out that the current supply and demand growth of low-carbon steel is still relatively slow, mainly limited by high investment thresholds and production costs.
POSCO plans to reduce carbon emissions by 10% by 2030, 50% by 2040, and strive to achieve carbon neutrality by 2050. To this end, POSCO plans to put into operation an electric arc furnace with an annual output of 2.5 million tons in the Guangyang plant area by 2026, and also plans to put into operation a hydrogen plant with an annual output of 20000 to 40000 tons in western Australia before 2028 for the production of hot pressed iron blocks (HBI).
Luo Chenghua, head of the Industrial Supply Chain Policy Office of the Ministry of Industry of South Korea, said that more policy support measures would be introduced in the future, including the guarantee of stable supply of hydrogen and electricity, as well as supporting investment in R&D budget, to ensure the smooth transition of hydrogen based steelmaking technology.
The market LR/EH32 STEEL view believes that the promotion of low-carbon steelmaking not only requires financial and policy support, but also urgently needs supporting regulatory mechanisms to gradually improve, in order to help the systematic transformation of the industrial chain.
