GWANGYANG, South Jeolla Province -- Safety guiding fences were set up at Posco’s electrical steel sheet plant in Gwangyang, South Jeolla Province, on Friday. The plant, which is in the final stages of phase one construction before its scheduled start for partial operations in October, signifies the South Korean steel giant’s will to bolster its eco-friendly vehicle materials business.

“We are in the final stages of constructing the electrical steel sheet plant. Basically, all equipment has been installed. Some parts need to be assembled. We will begin a test operation next week,” said Ahn Hyung-tae, team leader at Posco's investment planning and engineering office.

“From supplying materials to manufacturing products, every level of the work process is fully automated. The operation will be monitored in real time and in case of any abnormality, the system will alert the person in charge,” Ahn added.

Posco began building the electrical steel sheet plant at Gwangyang Steelworks, the biggest single steel-making site in the world covering about 21 million square meters in the country’s southern city last April. The steelmaker decided to invest 1 trillion won ($770 million) in the new plant to take the lead in the global non-oriented electrical steel sheet market.

Once the initial phase of the construction is completed in October, the Gwangyang electrical steel sheet plant will have an annual production capacity of 150,000 metric tons. The Gwangyang plant, which covers about 240,000 square meters in total, will have an annual production capacity of 300,000 tons once phase two construction is completed by October next year.

The plant is designed to produce Posco’s patented product -- Hyper Non-oriented electrical steel sheets, called “Hyper NO.” Posco has already been producing Hyper NO at Pohang Steelworks with an annual production capacity of 100,000 tons.

The total annual production capacity of 400,000 tons from the two Posco plants in Gwangyang and Pohang will eventually be enough to manufacture driving motors for 5 million EVs, according to Posco.

Hyper NO has 30 percent lower energy loss rates than the existing electrical steel sheets. As Hyper NO can convert electrical energy into rotational energy with higher efficiency, market demand for its use in motors of eco-friendly cars such as electric vehicles has been on the rise.

Posco currently has the technical capability to produce Hyper NO with a width of 0.15 millimeters. The steelmaker said it plans to advance the technology to be able to produce Hyper NO as thin as 0.1 mm to help EVs lengthen driving distances and secure more global customers.

According to market analysis firm IHS Markit, the global demand for non-oriented electrical steel sheets for eco-friendly vehicles is projected to increase by 20 percent each year from 320,000 tons in 2020 to 4 million tons in 2033. The analysis forecasts that demand will outstrip supply from 2025, causing a shortage of about 927,000 tons from 2030.

“In order to respond to the increasing demand for Hyper NO in the future, Posco is reviewing plans to build new electrical steel sheet plants in the country and overseas or expand the current plants,” said Kim Chang-mook, head of electrified vehicles materials sales group at Posco. “In accordance with the era of new eco-friendly cars, Posco is looking to discover new eco-friendly materials.”