South Korea’s top steelmaker POSCO started to construct an industrial gas production facility with a capacity of 250,000 tons at its secondary battery-dedicated complex in Yeongil Bay Industrial Complex, Pohang, North Gyeongsang Province, according to the company on Tuesday.

The company invested 100 billion won ($76.1 million). It plans to produce 250,000 tons of industrial oxygen and nitrogen annually at this location.

A new oxygen plant will be established on a site of about 16,500 square meters, featuring an air separation unit (ASU) to separate and refine oxygen and nitrogen from the air, and a large storage tank capable of storing 2,000 tons of liquid oxygen.

The plan is to first install the large storage tank by the second half of next year and complete the ASU facility by the second half of 2025.

This will supply high-purity oxygen and nitrogen for use in the production processes of cathode materials, an essential component of secondary batteries, and nickel refining processes.

POSCO, through this new ASU facility, will provide the high-purity oxygen and nitrogen produced to POSCO Future M Co., which operates a cathode material plant in the secondary battery-dedicated complex in Pohang. With the newly established ASU and large storage tank, POSCO will be able to supply up to 100,000 tons of cathode materials, 50,000 tons of pure nickel and 110,000 tons of anode materials annually.

Since 2021, POSCO has been engaging in new businesses using industrial gases produced at the steel mill's oxygen plant. In January of this year, the company established the "Industrial Gas Business Unit" and officially moved into the industrial gas market. Currently, POSCO owns a total of 22 oxygen plants at Pohang and Gwangyang steel mills.

POSCO produces 17 million tons of industrial gases annually, of which 16 million tons are used in the steel production process. Oxygen and nitrogen are essential materials not only for steel but also for various industries, including semiconductors, shipbuilding, chemicals, and automobiles.

The domestic industrial gas market is estimated to be worth 2.2 trillion won ($1.68 billion) in a year, and the liquefied gas market is estimated to be worth 500 billion won ($381 million) annually. POSCO expects continuous growth in this sector, particularly in industries such as semiconductors and secondary battery materials, which account for 80% of the demand in the gas market.

"With the completion of the oxygen plant, POSCO has officially expanded its supply in the domestic industrial gas market, where foreign and private equity-owned companies occupy more than 90%," said a POSCO official.

POSCO plans to explore ways to expand ASU facilities near demand locations in the future and to pursue the commercialization of special gases, including rare gases essential for the semiconductor industry, such as neon, krypton, xenon and special gases using by-products from the steel mill.