The company is expanding its scrap yard in Gwangyang and will initially rely mainly on its own raw materials
South Korean steelmaker Posco is preparing to launch a new electric arc furnace (EAF) with a capacity of 2.5 million tons of steel per year at its Gwangyang plant in Gwangyang in June 2026, according to Kallanish.
Construction of the unit began in 2024 and was completed in 2025. The new facility is part of the company’s policy to improve energy efficiency and gradually transform its production base.
For the new EAF, Posco ordered a Consteel continuous scrap feeding system and a Consterrer electromagnetic stirring system from Italy’s Tenova. The company plans to either produce products directly from liquid steel produced in an electric arc furnace or use melting technology with the addition of pig iron produced in blast furnaces. In addition, Posco intends to use waste gases generated during EAF operation to preheat scrap, which should improve the energy efficiency of production.
At the same time, the company is expanding its scrap storage facility at the Gwangyang plant. This work is scheduled for completion in August. After the upgrade, storage capacity will increase from 110,000 tons to 160,000 tons, which should improve transshipment efficiency and ensure a more stable supply of raw materials for the new unit.
In the initial stage after launch, external scrap purchases are expected to be limited. Posco plans to primarily use internal scrap generated at the Gwangyang site itself while quality stabilization and operational testing are ongoing. The company estimates that scrap purchases could reach around 2 million tons in 2026.
At the same time, scrap consumption may remain relatively subdued in the short term. The company attributes this to the slower-than-expected development of the green steel market, which does not yet provide grounds for a faster increase in scrap use.
As a reminder, POSCO Holdings is selling its remaining stake in Japanese company Nippon Steel. The South Korean steel producer is expected to receive more than 200 billion won (approximately $136.51 million) in additional cash. POSCO received 25.3 billion yen ($237.5 billion won) from the September sale of its shares in Nippon.
POSCO is expanding its investments in new areas of activity (secondary materials for batteries, hydrogen) and continues to sell non-core assets. The sale of its stake in the Japanese company is part of this strategy.
