South Korean steelmaker POSCO is preparing to break ground this month on a pilot facility for hydrogen-based steelmaking, with a capacity of 300kt/yr at its Pohang steel complex in North Gyeongsang Province.

Scheduled for completion in 2026, the facility will begin testing the production of low-carbon steel, which the company hopes will ultimately reduce its carbon emissions by up to 90%.

POSCO said the pilot plant will be the world’s first of its kind to use fluidized bed reduction reactors (HyREX) and widen its gap with rival steelmakers. It aims to reach carbon neutrality by 2050.

The fluidized bed reduction reactor is based on an original fine iron ore reduction technology which produces direct reduced iron (DRI) by combining iron ore fines and hydrogen.

A POSCO official stated that other global steelmakers are either in the experimental stages for the hydrogen-fuelled steelmaking technology or using the mix of hydrogen and other fossil fuels to power furnaces.

The cost of transforming to hydrogen-based steel production is estimated at up to 40 trillion won ($30 billion), including sunk costs for blast furnaces and investments, according to the company.