[Editorial] POSCO’s Steel Production Innovations Teach Korean Economy a Lesson

When POSCO built its steel mills in Pohang 40 years ago on nothing but sand, one of its founding visions was to dedicate itself to the nation’s growth by steel producing. Since then, the company has been true to its word.

Yesterday was a groundbreaking day for the steel industry as POSCO completed the construction of a new FINEX plant that will adopt independently developed technology. The construction was another testimony to POSCO’s strong commitment to the nation.

The FINEX process is an innovative iron making technology directly using iron ore fines and non-coking coal. Unlike the previous processing technology, which involves sintering and coke making, the new process can cut down production costs by 15 percent. Furthermore, it can also dramatically reduce air pollution by up to 99 percent as the preliminary processing of raw materials is eliminated.

More than 80 percent of the world’s iron ore comes in the form of iron ore fines, each grain measuring less than 8 mm in diameter. In this regard, POSCO has opened a new chapter in the history of the global steel industry by taking the lead in the commercialization and mass production of FINEX technology, putting many Japanese and European steel giants way behind.

The commercialization of FINEX technology has many lessons for the Korean economy and industries. POSCO has invested 550 billion won over the last 15 years in research and development of FINEX technology. It has also made 58 patent applications in 20 or more countries. On the main gate of POSCO Pohang plant hangs a board that has “Limited resources, Unlimited creativity” written on it.

The groundbreaking development of FINEX technology is a living proof showing that creativity is key to POSCO’s success.

A decade after the Asian financial crisis, the Korean economy now has a different economic growth paradigm. In other words, economic growth hinges on the productivity boost bolstered by technological innovations, rather than on increased production factor inputs such as capital and labor. The culprit behind our economy’s dim prospects of growth is sagging productivity. A productivity boost is possible only when the economy sees more high value-added activities, including the development of cutting-edge technology such as FINEX. At the beginning stage of Korea’s economic development, our forerunners found hope in the steel industry to bolster our economy. It is now our turn to reignite our growth engine for future generations.