POSCO has finished building a 2.5 million tonne per year electric arc furnace at its Gwangyang steelworks, the largest such facility in South Korea. By using scrap steel instead of iron ore in a blast furnace, the EAF is expected to cut CO2 emissions by up to 75% compared to conventional methods. The project cost roughly KRW 600 billion (USD 397 million) and took over two years to build. The new furnace is a key part of POSCO's strategy to meet tightening carbon regulations, including South Korea's Phase 4 emissions trading scheme and the EU's Carbon Border Adjustment Mechanism. It also serves as a bridge technology until the company's HyRex hydrogen-based steelmaking process becomes commercial around 2030. POSCO is also testing a hybrid process that blends molten iron from blast furnaces with EAF output to maintain quality for premium products like automotive steel while reducing emissions. This move signals that large steelmakers are investing in scrap-based EAF technology as a near-term decarbonization lever, even as they pursue longer-term hydrogen routes. The project gives POSCO a concrete emissions reduction tool ahead of CBAM's full implementation, which will directly affect Korean steel exports to Europe.
