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Paradigm shift

Hydrogen, aerospace, materials: key words for Korean business leaders

By Apr 01, 2021 (Gmt+09:00)

Hydrogen facility of Hyosung Heavy Industries
Hydrogen facility of Hyosung Heavy Industries

South Korea’s top conglomerates have enjoyed their domestic market leadership for decades with a focus on the steel, shipbuilding and petrochemical businesses – the driving force behind the country’s economic success.

With a generational leadership change at major companies kicking in, the big businesses are setting their sights on new growth drivers: hydrogen, aerospace and new materials. And they are getting favorable responses from the market.

Business groups such as POSCO, Hanwha, Hyundai Heavy and Hyosung saw the share price of their affiliates increase multiple times just over the past couple of years

Analysts say their pursuit of newly emerging business areas could lead to a paradigm shift across the industries, creating a new pecking order in the corporate landscape.

“Following the COVID-19 outbreak, middle-ranking conglomerates are getting the market attention for their attempts at new businesses. If they succeed in their efforts, they will emerge as Korea’s new economic leaders,” said Choe Seok-won, head of research at SK Securities Co.


POSOCO, the country’s largest steelmaker, is fostering battery materials for electric vehicles as its next growth engine.

In December, the company unveiled its goal of becoming the world’s top player in the global EV battery materials market by 2030 by establishing a value chain from raw material procurement to production of battery materials. Its affiliate POSCO Chemical Co. will lead the initiative.

POSCO Chairman Choi Jeong-woo has also said the steel group will establish a facility that can produce 5 million tons of hydrogen by 2050 and achieve annual sales of 30 trillion won in the hydrogen business by that year.

The move comes as tougher global environmental regulations on carbon emissions are driving governments and private companies to embrace the hydrogen economy, which utilizes the use of hydrogen as a fuel for heat, hydrogen vehicles, energy storage and long-distance energy transport.

As part of such efforts, POSCO in February agreed with Hyundai Motor Co. to jointly develop technology that uses hydrogen instead of coking coal to produce steel. The two companies also agreed to cooperate in hydrogen-related projects and explore overseas business opportunities.


Meanwhile, Hanwha Group is widening its business focus from petrochemicals and explosives to renewable energy, including solar power and hydrogen, as well as future mobility and aerospace.

Kim Dong-kwan, the eldest son of Group Chairman Kim Seung-youn, is leading the conglomerate’s chemical and future energy segments. In March, the group launched an internal task force, dubbed Space Hub, led by the junior Kim, to consolidate all space-relevant resources and technology of its affiliates under one roof.


Hyundai Heavy Industries Holdings Co., the holding company of Korea’s largest shipbuilder, is also betting on the hydrogen economy and the initiative is led by Chung Ki-Sun, the group’s senior vice president and the grandson of Hyundai founder Chung Ju-yung.

In early March, the company and Saudi Arabian Oil Co., known as Saudi Aramco, agreed to launch a hydrogen partnership in a step toward building a greener business model.

Hydrogen, aerospace, materials: key words for Korean business leaders

Under the agreement, Hyundai Heavy’s refining unit Hyundai Oilbank will import liquefied petroleum gas (LPG) from Aramco to produce blue hydrogen, a type of hydrogen with significantly reduced carbon emission using carbon capture and storage (CCS) technology.

The group’s shipbuilding arm, Korea Shipbuilding & Offshore Engineering Co. (KSOE), is joining hands with Saudi Aramco to develop an ammonia-fueled ship as well as a carrier that can simultaneously transport both LPG and carbon dioxide (CO2).

Hyundai Heavy has also been diversifying into other business sectors, including robotics and artificial intelligence (AI), steered by Chung.


Another conglomerate that focuses on new growth businesses, including hydrogen, is Hyosung.

In February, Hyosung Heavy Industries Corp. and global industrial gas supplier Linde plc. agreed to establish the world's largest liquid hydrogen plant via two joint ventures to expand their presence in the hydrogen energy market.

The textile and chemicals conglomerate, led by Group Chairman Cho Hyun-joon, has been ramping up efforts to sell non-core assets and list major subsidiaries on the Korean bourse to raise funds for new growth drivers, including hydrogen, carbon fiber manufacturing and data centers.

Industry watchers said the Korean conglomerates are aggressively looking for new business models as their current mainstay areas are slowing down in revenue growth.

POSCO’s steel business revenue declined to 30 trillion won in 2020, down more than 10% from 26 trillion won in the previous year.

Hyundai Heavy is also witnessing a steady fall in its sales to 18 trillion won last year from 26 trillion won in 2019.

Write to Jae-Kwang Ahn and Man-Su Choe at

In-Soo Nam edited this article.
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