South Korea plans to create a KRW 150 trillion (USD 117 million) fund to provide assistance for steel makers' transition to a low-emission production structure and to boost competitiveness. South Korean Ministry of Trade, Industry & Energy has decided to set up an alliance for cooperation and policy coordination in the first quarter of this year and to launch the fund for decarbonization projects, which will be used when their current KRW 150 billion fund for the industry's environmental, social and corporate governance runs out.

The strategy aims to lay the foundation for the steel sector to evolve and includes plans such as ensuring stable ferrous scrap supply and replacing blast furnaces with hydrogen direct reduction reactors.

Ministry said “Ensuring a stable supply of ferrous scrap is especially important given a likely increase in global demand for ferrous scrap, which is an essential raw material for electrical arc furnaces, as countries seek to decarbonize. Global steel scrap demand was at 690 million tonne in 2021 and will rise to 1.26 billion tonne by 2050. Countries have also started to restrict ferrous scrap exports. Ferrous scrap is currently treated as waste under South Korea's Waste Management Act and is subject to various regulations, resulting in a lack of an institutional foundation for fostering it as a resource industry. Motie will consequently consult the country's environment ministry to exclude ferrous scrap from the act by recognizing it as a circular resource, and also review legislation to support business activity such as scrap manufacturing.”

Ministry said “Second, South Korea aims to replace 11 blast furnaces with 14 hydrogen direct reduction reactors by 2050. The government will set aside KRW 26.9 billion over 2023-25 to finish developing the hydrogen direct reduction technology by 2025, with hydrogen used instead of coal to reduce iron ore. It will also secure a budget to conduct a 1mn t demonstration by 2030. Motie expects the introduction of this technology to cut the steel industry's carbon emissions by 85% or 86 million tonne, from 101.2 million tonne in 2018. There will also be an investment of KRW 240 billion by 2030 to develop technology to minimize carbon emissions in existing blast furnaces and EAFs through fuel substitutions and high-efficiency EAFs. This is in light of the amount of time introducing hydrogen direct reduction technology will take.”

Ministry said “Third, South Korea plans to shift towards developing high-value steel products, in response to changes in material demand from major industries such as automobiles and shipbuilding. This is especially for high-manganese steel that can withstand cryogenic environments such as LNG and liquefied hydrogen storage tanks.”

Ministry said “Lastly, South Korea will consider taking countermeasures to trade barriers and exports in efforts to boost steel exports, including consulting with the EU about its carbon border adjustment mechanism that levies a tax on imports with high carbon intensities. The country sees new steel demand from emerging markets such as the Middle East, India and the ASEAN countries, with plans to continue negotiations for free trade agreements.”

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