POSCO stops FINEX unit in race for greener steel

Overshadowed by other announcements – such as its 50-50 venture with India's JSW Steel for a 6 million tonnes/year integrated steel mill – POSCO's confirmation that it had finally stopped the No.2 FINEX plant at its Pohang works on Korea's southeast coast last month was generally ignored by mainstream media.

The FINEX plant's retirement was a mere line entry to happier news that POSCO's new electric arc furnace-based steel plant at its Gwangyang works on the country's southern coast could start as early as next month.

"(The Q1 disclosure said) that approval for a plan to redevelop a National Industrial Complex at Pohang has enabled the preparation of a hydrogen reduction steelmaking site, while a new electric furnace with an annual capacity of 2.5 million tonnes is scheduled to commence operations in Gwangyang in June," local daily Chosun Ilbo reported blandly.

Appreciating the significance of the FINEX plant's shutdown requires some background.

Developed in the late 1990s, POSCO's patented FINEX process uses untreated fine iron ore (hence the name) and non-coking coal to produce a hot metal identical in composition to the pig iron produced using a conventional blast furnace, but with lower input costs and substantial reductions in SOx, NOx and dust emissions, as Mysteel Global has reported.

POSCO commissioned a 600,000 t/y FINEX pilot plant at Pohang in June 2003, started its first commercial scale unit (the No.2) of 1.5 million mt/y capacity in 2007 and the No.3 unit of 2 million t/y in 2014.

During the nearly two decades since commercially launching FINEX, POSCO tried to persuade steelmakers worldwide to buy its technology – in Vietnam, India (twice), Iran, China and elsewhere – but without meaningful success, as reported. Heavy construction costs and operational difficulties were cited as drawbacks.

Meanwhile, steel technologies that supported the conventional BF-BOF route to steelmaking began losing favour for their reliance on fossil fuels. With 'green' steelmaking the new goal for major steel firms, POSCO joined the rush to design and build ironmaking plants incorporating hydrogen reduction, with its HyREX (Hydrogen Reduction) process making its public debut in October 2021.

In conventional steelmaking using a blast furnace where iron ore (iron oxide) and coke (coal) are introduced, the mix is blasted with hot air which ignites and burns the coke, creating a reaction which removes the oxygen from the iron ore, 'reducing' it to molten metal. 

The problem is that fossil fuels such as coal and natural gas produce carbon dioxide when chemically reacted with iron ore, but by substituting heated hydrogen gas as the iron oxide reduction agent, only water is produced. POSCO currently uses 25% hydrogen in its FINEX reduction gases whereas with HyREX, POSCO aims to achieve the same result with 100% hydrogen.

If the FINEX process was already losing favour with POSCO, the massive fire at the No.3 FINEX plant in Pohang in November 2024 probably speeded its decline. Accompanied by loud explosions, the fire that burned in the FINEX plant's tower for five hours was not the kind of advertisement for FINEX that POSCO might have wished for.

POSCO's No.3 FINEX plant at Pohang

Source: POSCO E&C

Moreover, the No.3 unit was not repaired and restarted until December last year as POSCO decided to revamp the equipment at the same time. During the interim, the No.2 unit was still functioning but by last October, the company had already decided to scrap it.

"POSCO will clean up the No.2 FINEX facilities and speed up the transition to a low-carbon production system," industry daily Steel & Metal News observed last weekend.

"Instead of completing the operation of small and aging facilities, the termination of the No. 2 FINEX plant is the starting point of process transformation beyond simple equipment arrangement. The technology and experience accumulated during the (FINEX) operation process will lead to the hydrogen reduction steelmaking (HyREX) process in the future," it suggested.

The new EAF at the Gwangyang Works is linked to that future, though at the time of the groundbreaking for it in February 2024, POSCO had been vague.

"Amid the rapidly changing business environment due to global climate crises and trade regulations, we will establish a swift and competitive low-carbon production system starting with the launch of this electric furnace project," then POSCO CEO, Kim Hag-dong, had said at the time.

Besides directly using the molten steel the EAF will produce, POSCO will apply technology to mix it with hot metal in Gwangyang's blast furnaces to produce high-grade, low-carbon steel products, as Mysteel Global reported.

"The EAF facility is a key component in the middle stage of POSCO's carbon neutrality strategy," SMN noted. "Initially, the proportion of combined melting products mixed with blast furnace molten metal is expected to be high (but) in the future, according to customer needs and quality conditions, output of products that use electric furnace molten metal alone is expected to gradually expand."

Hot-run trials on the new EAF will likely begin later this month.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com