South Korea's Posco has warned that efforts to make its steelmaking processes less polluting in the face of tougher regulations and customer demands could make the company less cost-competitive against Chinese and Indian rivals.

The world’s sixth-biggest steelmaker is South Korea’s worst polluter, as conventional processes of producing the metal that use coking coal to melt iron ore and remove oxygen are highly carbon-intensive. The company wants to replace coal with hydrogen by 2050 to meet tougher domestic regulations and growing public calls for low-carbon steel products.

Posco estimates that decarbonising its steelmaking operations will cost about Won40tn ($32bn) and wants to apply the hydrogen-based steelmaking technology to eight furnaces from 2034.