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South Korean steelmaker warns inexperienced push will profit China and India

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South Korea’s Posco has warned that efforts to make its steelmaking processes much less polluting within the face of harder rules and buyer calls for might make the corporate much less cost-competitive towards Chinese and Indian rivals.

The world’s sixth-biggest steelmaker is South Korea’s worst polluter, as typical processes of manufacturing the steel that use coking coal to soften iron ore and take away oxygen are extremely carbon-intensive. The firm desires to interchange coal with hydrogen by 2050 to fulfill harder home rules and rising public requires low-carbon metal merchandise.

Posco estimates that decarbonising its steelmaking operations will price about Won40tn ($32bn) and desires to use the hydrogen-based steelmaking expertise to eight furnaces from 2034.

“We are taking environmental concerns seriously as our customers like Apple and Ørsted are asking us to supply green steel while Europe is imposing a carbon border tax and South Korea is reducing carbon credits for steelmakers,” Cho Ju-ik, head of Posco’s hydrogen enterprise, informed the Financial Times in an interview. “We need to fundamentally change how we make steel.”

But he added that the transition would weaken the corporate’s aggressive place as Chinese and Indians rivals face much less strain to alter their method.

“Our concern is if countries can strike a balance. Europe, Japan and South Korea are going aggressively [towards green steelmaking] but our competitors in China and India face looser domestic regulations,” he stated.

“This can put us at a disadvantage. China also has good conditions for producing renewable energy, which will result in different hydrogen prices and steelmaking costs.”

The metal trade accounts for 7-9 per cent of all fossil gasoline emissions and a few of the world’s greatest steelmakers, together with ArcelorMittal, ThyssenKrupp and China’s Baowu, have launched initiatives to cut back their carbon footprint. Sweden’s SSAB is on the forefront of such efforts, producing fossil-free metal utilizing hydrogen gasoline final 12 months.

Analysts stated that constructing a hydrogen provide chain was essential to Posco’s transition to inexperienced steelmaking, as South Korea lacks sufficient renewable vitality capability to provide ample portions of the gasoline.

Cho estimated that Posco wanted about 5mn tonnes of hydrogen by 2050 and deliberate to supply 80 per cent of provides of the gasoline from overseas. The firm has signed preliminary offers with world oil producers to safe hydrogen from imported pure gasoline.

It additionally plans to develop inexperienced hydrogen initiatives utilizing renewable sources in Australia, Malaysia and the Middle East.

“It is not easy to secure the price competitiveness of green steel because it is difficult to mass produce green hydrogen from renewable sources,” stated Kim Kyung-sik, who heads Steel Scrap Research Center. “The industry has a long way to go for decarbonisation in terms of technological development and cost reduction.”

Source: www.ft.com

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