POSCO Gwangyang steel plant. Korea Times file

POSCO, South Korea's top steelmaker, on Friday broke ground for a new steel plant amid rising demand from automakers and home appliance makers.

POSCO will spend 1 trillion won ($805 million) in building the plant in the southwestern port of Gwangyang, which will have an annual production capacity of 300,000 tons of non-oriented electrical steel.

Electrical steel is used in electric motors to realize high efficiency. In particular, non-oriented electrical steel can reduce power loss for motors, and is used for eco-friendly automobiles and home appliances.

POSCO currently produces 100,000 tons of non-oriented electrical steel annually.

Its annual output capacity of electrical steel will rise to 1.13 million tons when the construction of the new plant is completed in 2025, according to POSCO.

According to market tracker IHS Markit, demand for non-oriented electrical steel from automakers will rise at an annualized rate of 20 percent to 4 million tons in 2033, from 320,000 tons in 2020. (Yonhap)