POSCO finally got the Chinese authority’s approval on May 22 for its project to build a steel plant in Chongqing in China with the Finex steel making technology that produces crude steel without the use of a traditional blast furnace, the steel maker said on May 27.
The Korean steel giant has been working on the project to build a steel production plant in joint venture in Chongqing with its partner, Chongqing Steel Co., since 2013. It will have an annual capacity of 3 million tons of steel. Now that they have the Chinese government’s approval for the project, they will officially form a joint venture company this year to formally launch the steel plant construction.
POSCO and its Chinese partner will first build two steel plants to produce 1.5 million tons of steel with the Finex technology and a steel plate plant, parts of its integrated steel plant at a cost of around 2.5 trillion won. POSCO will sell its Finex steel making technology to the new steel plants and invest funds in the new steel plants.
Chairman Kwon Oh-joon is touting Finex steel production technology as a next generation growth engine for the steel maker. POSCO developed the technology over 10 years from 1992 at a cost of more than 1 trillion won. The steel making technology was commercialized in 2007, and POSCO completed its third steel plant using the Finex technology with an annual capacity for 2 million tons of steel.
The blast furnace technology was developed in the 14th century, which requires a blast furnace some 70 meters tall to melt iron ore with cokes to generate 1,200 degrees of heat. Coals have to be made into cokes while iron ores have to be put through sintering process so that they can be put through blast furnaces.
Under Finex technology, molten iron is produced directly using iron ore fines and non-coking coal, rather than traditional blast furnace methods through sintering and reduction with coke. Elimination of preliminary processing can make the Finex plant less expensive to build than a blast furnace facility of the same scale. The process also produces less pollutants, such as sulfur oxides, nitrogen oxides and carbon dioxide than traditional methods
Finex reduces investment costs when compared to existing furnaces by removing the coke and sintering processes, which process the materials in the existing furnace. A further benefit is that it is more environment sound, reducing pollutants such as sulfuric oxides by 97 percent, nitric oxides by 99 percent and fugitive dust by 72 percent.
Additionally, more than 80 percent of the iron ore can be used in powder forms under 8mm in diameter, which are more than 20 percent cheaper in cost, reducing production costs overall.
But the technology has yet to prove fully the safety for its installations and has not been exported, as it’s a core state-owned technology requiring government approval to export. But Chairman Kwon said POSCO should start earning from the technologies like many foreign companies do through licensing agreements for their technologies.
The steel maker believes that China is and will be the biggest market for the new steel making technology with the country’s need for steel products expected to be around 300 million tons annually.
One of the biggest advantages that the Finex technology has is that the steel making technology can be built in inland regions as the steel plants using the technology has no need for harbors nearby to unload the high-quality raw materials, which is why a number of countries like India and those in the Middle East want to import the Finex technology for their steel plants. One disadvantage could be that the exports of the steel making technology need government approval because the technology is state-owned and subject to protection.
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