By Kang Seung-woo
DANGJIN, South Chungcheong Province ― Hyundai Steel lit its second blast furnace at its integrated steel mill in Dangjin, 123 kilometers southwest of Seoul.
With the maiden operation of the second blast furnace, which can churn out roughly 4 million tons of steel annually, Hyundai Steel’s total annual production capacity is expected to rise to 20 million tons, the ninth largest production according to the World Steel Association in 2009. The operation of the furnace is expected to get into full swing early next year, according to Hyundai Steel.
The nation’s second-largest steel firm started full production of its first-ever integrated blast furnace, whose annual capacity is also 4 million tons, in April and it has also operated electric-arc furnaces that produce some 12 million tons of steel annually using scrap metal in Incheon, Pohang and Dangjin in Korea and Ching Tao, China.
An electric-arc furnace melts scrap metal to produce second-tier steel products, while a blast furnace is one that makes first-rate steel products from iron ore.
“Today is significant in that firing up the second blast furnace 29 months after breaking ground on the facility (in July 2008),” Hyundai-Kia Automotive Group Chairman Chung Mong-koo said at the blow-in ceremony to mark the operation of the second furnace. Hyundai Steel is the steel-making arm of the nation’s largest automobile manufacturer.
“The construction of the second furnace will push Hyundai Steel into the world’s top 10 steelmakers with an annual capacity of 20 million tons.”
According to the company, its third blast furnace will be completed by 2015.
“After closely monitoring the market condition, we will prepare ourselves to build a third (furnace),” Hyundai Steel President Woo Yoo-cheol said.
“There is currently no specific date due to licenses and permits, but it will be constructed by 2015 as planned.”
Along with the capacity, Hyundai has expanded its product portfolio ranging from rebars and H-section steel to high-value products such as automotive steel and plates used for ships to boost its presence as the global major steel producer.
Korea, which also has POSCO ― the world’s No. 3 steelmaker along with Hyundai Steel is the world’s sixth-largest steel manufacturer, but due to the lack of crude steel production capacity, it still buys 20 million tons of steel products from overseas, mainly China and Japan. In 2008, the country imported 28.94 million tons of steel, or about 52.3 percent of its annual crude steel production. Last year, it also bought 20.6 million tons of steel products from overseas rivals.
As local steel firms could not match growing steel demand from local companies, they had to depend on Japanese counterparts.
The steel sector represents a large portion of Korea’s trade deficit with Japan in the past two years, as it suffered a shortfall of $7.8 billion out of $32.7 billion and $6.4 billion out of $27.7 billion in 2008 and 2009, respectively.
Therefore, Hyundai Steel expects that an annual supply of 8 million tons of steel products will improve the trade deficit with Japan and help the steel-demanding auto and shipbuilding industries secure a stable supply of steel.
Hyundai Steel has tried to bring a positive impact on the local economy by creating more jobs and business opportunities via a green field investment. A green field investment is a financial investment by a company or a government to construct a project in basic components.
According to local research data, the Dangjin steel works will have an economic effect equivalent to creating about 171,000 jobs - 93,000 related to the construction and 78,000 for operations.
Hyundai Steel, the nation’s oldest steel firm, was established as Korea Heavy Industry Corp. in 1953 and was incorporated into Hyundai Group in 1978. It also took over the facility from now-defunct Hanbo Iron and Steel in 2004.