On the morning of Dec. 23 a fire broke out at POSCO’s Pohang Works, temporarily halting the operation of three blast furnaces. The government and POSCO said that the restart of the furnaces after putting out the fire would not cause any major disruption to the production and supply of products. However, this is the second time in little more than a year that the blast furnaces at the steel plant, part of Korean industry, have been shut down following the flood caused by Typhoon Hinnamno last year, raising concerns about the continuing stable operation of the production facilities. In addition, the major accident occurred just before the election of the next chairman of POSCO Group, complicating the situation at the company.
According to sources in POSCO and others on Dec. 24, the fire broke out around the second blast furnace of Pohang Works in the Nam district of Pohang of North Gyeongsang Province at 7:07 a.m. on Dec. 23. Local fire department authorities are investigating the exact cause of the fire, believing that it first broke out in cables at a spot where iron ore and other materials are melted down to produce molten iron. The fire was extinguished in 2 hours and 10 minutes. No one was killed.
The second the blast furnace shutdown at Pohang Works has raised a need for a thorough inspection of facility operations. In early September last year, the plant was flooded after Typhoon Hinnamno hit the Pohang region and the blast furnace operation was halted for the first time since the plant opened. At the time, it took 135 days to fully normalize. The damage was estimated to be 2 trillion won. “Last year’s typhoon, followed by a fire, caused the blast furnace to stop, and even though it was a holiday, employees became very concerned while talking about it in an online chat room,” said a POSCO employee. “The steelmaker is showing poor business performance due to Chinese steelmakers’ price war but with this bad news, POSCO has a distracted atmosphere.”
“Pohang Works is a key base for steel production in Korea, and even a temporary shutdown can create a big ripple effect in demand industries such as shipbuilding and automobiles,” said Minister of Trade, Industry and Energy Bang Moon-kyu, who held an emergency video conference to check damage at the plant. In the fourth quarter of last year, POSCO Holdings suffered an operating loss of 435.5 billion won (US$335.5 million) due to the blast furnace shutdown in the aftermath of the flooding at Pohang Works.
Meanwhile, POSCO Chairman Choi Jeong-woo has neither hosted a video conference nor visited the damaged site since the fire. Previously, Choi had caused controversy by spending time playing golf on the weekend before Pohang Works was flooded due to Typhoon Hinnamno in September last year, neglecting to take measures against flood damage. He added oil to the fire by saying, “The person in charge according to the manual is Kim Hak-dong, vice chairman and CEO of POSCO,” seemingly passing the blame to Kim.
Choi has been drawing a lot of attention from the media since POSCO changed its bylaws at a board meeting on Dec. 19 to allow the process of selecting a new chairman to begin even if an incumbent chairman does not express a desire to remain in office, making him a candidate to become the next chairman. As the revision is the result of a new governance task force set up by POSCO Group in March under Choi’s direction, Choi is not free from criticism for the fact that he insisted on making the change to POSCO Group’s corporate government system yet has not announced his intention not to run for a third consecutive term.
“Even before this fire and last year’s flooding, POSCO had a string of major and minor accidents, including fatal ones that led to protests against Chairman Choi,” said an industry insider. “The shutdown caused by the fire may become a setback for Choi even if he seeks a third term.” Choi, who took the helm of the group in July 2018 during the Moon Jae-in administration, was elected for a second term in March 2021 and his term expires March of 2024.