South Korea passed the K-Steel Act to support steel producers

South Korea’s National Assembly (parliament) has passed the K-Steel Act to support the country’s steel producers, according to Business Korea.

Under the K-Steel Act, the Minister of Trade, Industry, and Energy is tasked with developing and implementing five-year master plans and annual action plans to strengthen the sector’s competitiveness and support the transition to carbon neutrality. Discussions and decision-making will be handled by a special committee under the Prime Minister.

In addition, the law includes practical measures such as selecting low-carbon steel technology and supporting demand creation, designating special “green” steel zones and supporting the construction of production facilities, strengthening scrap supply chains, and taking into account important infrastructure (electricity, water, and hydrogen) in national baseline plans.

The Korea Iron and Steel Association welcomed the passage of this bill. They expect the following: if K-Steel lays the legal foundation for supporting the sector, this policy will be implemented more quickly thanks to the steel industry development plan announced by the government on November 4.

At the same time, the industry is disappointed that the K-steel law excludes the electricity subsidies needed to switch to electric arc furnaces. In addition, reducing emissions to meet the nationally determined contribution (NDC) targets remains another burden, writes the Maeil Business Newspaper. Steel companies have calculated that the combined costs of electricity tariff increases and the purchase of emission permits could result in additional annual costs of up to 1 trillion won.

Three ministries opposed the government’s support for the steel industry in terms of electricity subsidies and tax breaks, citing the possibility of complaints to the World Trade Organization and equality with other industries.

In early November, the South Korean government announced a new package of measures to support the steel industry. The state will increase financial assistance, stimulate innovation, and promote the transition to high value-added steel production.

The plan includes a 400 billion won ($278 million) guarantee program to support steel exports, as well as 150 billion won for companies working with steel, aluminum, and copper products.