Dream Iron Mill

Result of 15 Years of Investment and Research-

The introduction of the blast furnace method in the 14th century played a decisive role in shaping modern-day steelmaking technology. However, it is POSCO’s leading-edge Finex technology that is breaking new ground in 21st century steel manufacturing.

Existing blast furnaces, which can mass-produce molten iron using iron-ore and soft coal, had drawbacks such as pollution and low profitability.

The method involved sintering and coke-making processes using iron-ore fines and bituminous coal which were mixed into chunks and then used in furnaces.

In contrast, Finex, an innovative iron-making technology, forwent such processes directly addressing the major problems with blast furnaces. The revolutionary method uses iron ore fines and soft coal in their original condition without processing.

As the preliminary processing of raw materials is eliminated, the cost of Finex facility construction and steel production is decreased 20 and 15 percent respectively, compared to blast furnaces of the same size.

Given the cut-throat competition among global steel giants for a five percent price difference, Finex could bring POSCO price-competitiveness 35 percent higher than those companies using conventional steel making methods.

The streamlined process also boasts dramatically reduced pollutants. In comparison with furnaces of the same size, Finex cuts nitrogen oxide and sulfur oxide by one and three percent respectively. Scattered dust particles are decreased by as much as 28 percent.

Finex Plant Construction in Vietnam and India-

The development of the Finex method is indeed a great feat, unachieved by century-old steel-makers in advanced countries, which had long sought alternative technologies to blast furnaces.

As in the cases of Japan’s DIOS (direct iron ore smelting reduction) and Australia’s HISMELT process, global steelmakers had tried to develop a fresh technique without processing iron ore fines, only to fail in mass production.

Ian Christmas, secretary general of the International Iron and Steel Institute (IISI), highly praised POSCO’s achievement in a video message for the dedication ceremony of its Finex plant, saying that Finex will greatly affect the world steel industry and that POSCO once again demonstrated it is and will continue to be one of the best steel companies worldwide.

POSCO, the world’s forth largest steel maker, is planning to replace obsolete furnaces in its Pohang iron mills with Finex facilities and to promote Finex as a global standard. The method is expected to be widely used in India and Vietnam given their abundant reserves of iron ore fines.

POSCO Chairman Lee Ku-taek explained that the integrated iron plant now under construction in India will be Finex-based. He added that additional investment in Vietnam and India, if made, will involve Finex technology.

In its overseas production bases, POSCO will make direct investments, not technology transfer, in order to prevent the technology from being leaked while utilizing it as the company’s core strategic competency.

POSCO has already applied 58 patents in over 20 foreign countries to protect related technologies.

POSCO toward No.2 in the World-

POSCO is aiming to produce an annual average of 1.5 million tons of steel from Finex plants alone. This is expected to increase its steel production capacity to 34 million tons next year, bringing the company up two notches from its current forth place in the world.

If the ongoing construction of integrated steel plants in India and Vietnam, and other future projects, are added to the list, POSCO could raise its capacity to 42 million tons a decade from now, possibly rivaling global leader Arcelor Mittal.

This could also help the Korean company to secure a comparative advantage in competition with global steel giants and avoid the risk of being the target of a hostile takeover.

Meanwhile, President Roh Moo-hyun said, “Finex is an innovative technology that Korea developed for the first time in the world. It is a great accomplishment in the history of international steel production. Posco proudly passes on its confidence to the Korean people.”

changkim@donga.com