The South Korean government is establishing a "Special Committee for Strengthening the Competitiveness of the Steel Industry," chaired by the Prime Minister, to support restructuring and the transition to eco-friendly, high-value-added steel production. The committee will set certification standards for low-carbon steel and facilitate business restructuring through exemptions under the Fair Trade Act.
On June 9, the Ministry of Trade, Industry and Energy announced that the enforcement decree for the Special Act on Strengthening the Competitiveness of the Steel Industry was approved at a Cabinet meeting. This decree outlines provisions delegated by the Steel Industry Act, which passed the National Assembly in December.
Specifically, the decree includes provisions for the formation and operation of the special committee, certification standards and procedures for low-carbon steel, criteria for designating low-carbon steel special zones, requirements for designating specialized recycling steel processing companies, and guidelines for joint actions and information exchange under the Fair Trade Act.
The domestic steel industry is facing declining profitability due to oversupply from China and weakening global demand. Additionally, the European Union's new steel quota (TRQ) system will take effect on July 1, further increasing the industry's burdens.
In response, the government will convene the special committee, chaired by the Prime Minister, to review basic plans every five years and to revise relevant laws and systems related to the steel industry. The committee will consist of government officials at the ministerial level from related ministries, including the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy, as well as private sector members.
With the EU's Carbon Border Adjustment Mechanism (CBAM) making carbon emission reduction a key issue, the certification for low-carbon steel will be based on production methods, applied technologies, and greenhouse gas emissions reductions, as determined by the Minister of Trade, Industry and Energy. The decree will establish a framework for creating a domestic low-carbon steel market by defining application and review procedures for certification and the scope of work for certification bodies.
Furthermore, low-carbon steel special zones will be designated based on the potential for industrial clustering and competitiveness, as well as the availability of necessary infrastructure. The requirements for designating specialized recycling steel processing companies will include possession of land, facilities, and equipment, thereby improving the quality of scrap steel, a key raw material for carbon neutrality.
The decree will also outline the application procedures, required documents, and government approval processes for joint actions by companies approved for business restructuring. It will establish pre-reporting guidelines and compliance requirements for information exchange to expedite the industry's restructuring efforts.
While the need for structural adjustments, such as production facility adjustments and product diversification, has been consistently raised within the industry, concerns over collusion have made active cooperation challenging. This exemption is expected to allow limited cooperation to maintain industrial competitiveness, similar to past restructuring processes in the shipbuilding and shipping industries.
The enforcement decree for the Steel Industry Act will take effect on June 17. The Ministry of Trade, Industry and Energy stated, "A legal foundation has been established to fundamentally enhance the competitiveness of the steel industry," and pledged to promptly advance the policy tasks outlined in the law through close collaboration with relevant ministries.
* This article has been translated by AI.
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