A miracle at pohang?
When you visit the city of Pohang, it is impossible to ignore the scale of South Korea’s industrial rise. Vast blast furnaces rise above the shoreline, and ships wait at the docks for coils of steel destined for the world’s construction sites and factories. This landscape tells the story of a country whose rapid growth was built on carbon-intensive industries. It helped South Korea transition from one of the poorest countries in the world in the 1960s to one of the wealthiest countries. This rapid growth is also known as the ‘miracle on the Han river’.
In Pohang, I visited the POSCO, one of the largest steel producers in South Korea. When the South Korean government unveiled plans to build the facilities, US AID and other international organizations refused to fund the project. According to those organizations, South Korea could better focus on agriculture, rather than a capital-intensive and technologically advanced project. However, Japan and South Korea came to an agreement to create the Japanese Reparation Fund for Korea, whose money could be used for building the steel plant. Among other projects, this helped pave the way for the economic development of South Korea.
The South Korean economy is export-driven and based on manufacturing. Mostly carbon-intensive industries. This means that South Korea needs massive decarbonization projects in order to reach the targets of the Paris Agreements. For POSCO the answer lies in the deployment of various technologies. I had the pleasure of talking to POSCO employees and listening to a presentation about their plans.
In the short term, the company emphasizes “bridge technologies” within the blast furnace–basic oxygen furnace (BF-BOF) route, such as using higher-quality pellets, replacing some carbon-based reduction agents with natural gas or hydrogen, and applying AI to optimize furnace efficiency. These measures are meant to reduce emissions while existing infrastructure is still in place.
The real transformation, however, lies in the HyREX® process. Unlike conventional steelmaking, which relies on coke to strip oxygen from iron ore, HyREX uses 100 percent hydrogen. The heart of this technology is a fluidized bed reactor (FBR) that can reduce fine iron ore particles without the sticking problems that plagued earlier hydrogen trials. Once reduced, the hydrogen direct reduced iron (H2-DRI) is melted in an electric smelting furnace (ESF) and transferred into an electric arc furnace (EAF) for steelmaking. The process eliminates the need for sintering and coking plants—two of the most carbon-intensive steps in traditional production. Scaling HyREX requires an immense build-up of infrastructure. The demonstration plant, with a planned capacity of 0.3 million tons per year, is under construction in Pohang, with commercial facilities of 2.5 million tons slated for the mid-2030s. The longer horizon envisions multiple HyREX units integrated with renewable or nuclear power, massive hydrogen storage systems, and optimized supply chains for iron ore, direct reduced iron, and scrap. CCUS (carbon capture, utilization, and storage) remains part of the mix, especially for retrofitting blast furnaces during the transition period. POSCO also highlights synergy with other industries: captured CO₂ can be reused in cement production or chemical synthesis, while excess hydrogen could be integrated into Korea’s broader energy system.
POSCO’s narrative is one of technological optimism. An optimism rooted in historic precedents. While the clock is ticking and the climate crisis is worsening every day, we need technological solutions. POSCO has proven that it can surprise the world by building advanced steel plants against all odds. Today’s hydrogen ambitions are daunting, especially because there is no green hydrogen market right now. Will POSCO’s transition towards carbon neutrality come at the cost of expanding nuclear power plants? Moreover, the climate transition is never just about technology. Workers need to be reskilled, and supply chains will shift. But I left Pohang with a sense of optimism. An optimism we need in what seems to be a continuous stream of negative news about the state of the world.
