Industrial Decarbonization: POSCO and BHP Launch HyREX Hydrogen Ironmaking Trial

Trial Launch in Pohang

On 30 October 2025, over at the Pohang Steelworks in South Korea’s North Gyeongsang Province, POSCO Group and BHP Group shook hands on a landmark deal. The occasion got an extra dose of excitement with Australian Prime Minister Anthony Albanese—making his first Korean visit in more than two decades—signing the Memorandum of Understanding (MoU). The goal? To get a demonstration-scale plant up and running for HyREX, a cutting-edge direct reduced iron (DRI) process powered by green hydrogen. And since it all went down alongside the APEC CEO Summit, execs from Rio Tinto and CATL were on hand, highlighting the global buzz around this push for industrial decarbonization. During the event, POSCO’s Chairman Jang In-hwa even floated the idea of building multilateral supply chain alliances to tackle mineral security and zero-emission technology efforts together.

How HyREX Works

Think of HyREX as traditional steelmaking’s cool new cousin. Instead of blasting iron ore with coke or coal, this method uses high-purity hydrogen production—over 99.9% pure—created via water electrolysis powered by renewables. Inside a vertical shaft furnace heated to around 800–1000°C, that hydrogen strips oxygen right out of the iron ore pellets, leaving you with sponge iron (DRI) and nothing but water vapor as a byproduct. BHP will supply top-notch Pilbara ore samples, while POSCO’s R&D crew tweaks the furnace settings, gas flows, and heat integration to squeeze out maximum efficiency. Early numbers are looking sweet, with up to a 90% cut in CO₂ emissions compared to traditional blast furnaces, and joint trials in Pohang are already proving it’s no pie in the sky.

Strategic Alliance Beyond Supply

What makes this partnership stand out is its shift from the old-school buyer–supplier model—where POSCO has been bringing in Australian ore since 1971—into a full-on co-innovation adventure. For the past 50-plus years, Australia has shipped more than 1.5 billion tons of iron ore and coal to Korea, building rock-solid trust. Now, BHP isn’t just the supplier; they’re throwing in technical consulting, furnace design insights, and guaranteed raw materials. Meanwhile, POSCO pitches in its steelmaking know-how, pilot plant setups, and a dedicated EcoBusiness Division hell-bent on sustainable energy solutions. And get this—they’re already chatting about a second-phase trial at a BHP site out in the Pilbara. It’s co-development in action, with technology hopping both ways.

Historical Context and Policy Backdrop

You can’t talk about this MoU without nodding to the bigger policy picture. Australia’s National Hydrogen Strategy from 2019, paired with South Korea’s Hydrogen Economy Roadmap, has been laying the groundwork for boosted hydrogen production and fresh export markets. Under these plans, both governments have funneled grants and R&D cash into electrolyzer rollouts, logistics improvements, and port upgrades. The 2025 MoU picks up steam from earlier government memoranda and letters of intent, riding the wave of the Korea-Australia Free Trade Agreement to fast-track customs, IP protection, and tariff breaks for clean energy projects. It’s a prime example of how aligned policy roadmaps can accelerate next-gen industrial decarbonization.

Wider Implications

• Climate progress: Near-zero-emission steel could slash about 7% of global CO₂ emissions from steelmaking—giving Paris Agreement goals a real boost.
• Supply chain resilience: Teaming up deepens Asia-Pacific critical mineral ties, cutting geopolitical risks and smoothing out price swings.
• Technology transfer: Swapping expertise fast-tracks hydrogen-based reduction processes across multiple steel hubs.
• Market standards: Real-world data from Pohang might set the benchmark for green steel certifications, tapping into premium markets.
• Strategic partnerships: This MoU is a template for multilateral teamwork—as highlighted by POSCO at the APEC CEO Summit.

Financial and Market Dynamics

Tech is the heart of this dream, but it’s money and market demand that’ll make or break HyREX’s success. With industry players chasing aggressive ESG goals and looming carbon border adjustment rules in the EU, green steel could command a premium price, helping offset higher production costs. That’s why POSCO and BHP are eyeing green bonds, sustainability-linked loans, and offtake deals with automakers, construction firms, and appliance manufacturers. They’re also keen to loop in multilateral development banks and export credit agencies to shave down capital expenses. Partnering with rating agencies on a green steel certification could give investors extra confidence. By aligning environmental impact with a solid business model, they’re aiming to roll out a repeatable framework for decarbonizing heavy industries worldwide.

Looking Ahead

From now through late 2026, engineering teams will be hard at work nailing down detailed designs, locking in hydrogen supply contracts—likely via on-site electrolyzers—and hooking pilot ducts into Pohang’s existing furnaces. Once the trials fire up, they’ll track reduction efficiency, throughput, and water capture, feeding all that data into a FEED (front-end engineering design) study slated for 2028. If everything hits the marks, POSCO and BHP plan to push HyREX into commercial gear by 2030—assuming hydrogen costs dip below $2/kg and policy tools like carbon pricing or production tax credits are in place.

They’re not stopping there. Both sides will scope out more financing through green bonds, carbon credits, and extra offtake contracts with big-name automakers and construction giants on the lookout for decarbonized steel. Working alongside electrolyzer manufacturers and grabbing support from multilateral banks could be the deciding factor in tackling heavy upfront investments and infrastructure hurdles.

Forward Look

So, will other steel giants jump on the bandwagon once HyREX proves its chops in Pohang? This project could trigger a seismic shift from coal-fueled blast furnaces to near-zero emission ironmaking. But the real challenge is piecing together investments, harmonizing regulations, and building out the hydrogen infrastructure. Nail those steps, and we might witness the birth of truly sustainable energy-driven steel that reshapes an industry that’s been the backbone of modern civilization for centuries.

About the Companies

POSCO Group: Founded in 1968, it’s grown into one of the world’s top steel producers, branching into energy, secondary battery materials, and cutting-edge decarbonization tech.
BHP Group: Established in 1885 and based in Melbourne, this mining titan has long been POSCO’s go-to for iron ore and is now doubling down on innovation to shrink the sector’s emissions footprint.