POSCO, South Korea's largest steelmaker, laid the groundwork for a new steel plant on Friday amid rising demand from automakers and home appliance manufacturers.
POSCO will spend 1 trillion won (approximately $805 million) to build a plant in the southwestern port of Gwangyang with an annual production capacity of 300,000 tons of non-oriented electrical steel.
Electrical steel is used in electric motors to achieve high efficiency. In particular, non-oriented electrical steel can reduce power loss in engines and is used for environmentally friendly cars and household appliances.
Currently, POSCO produces 100,000 tons of non-oriented electrical steel annually.
According to POSCO, its annual output of electrical steel will rise to 1.13 million tonnes once the new plant is completed in 2025.
According to market tracker IHS Markit, demand for non-oriented electrical steel from automakers will grow at an annualized rate of 20% to 4 million tonnes in 2033 from 320,000 tonnes in 2020.