Local corporate tax revenue in Dangjin dropped sharply from KRW 31.7 billion in 2022 to just KRW 2.8 billion in 2024, a decline of over 90%. This reflects the city’s deep dependence on the steel industry. Of its total manufacturing output of KRW 31.2 trillion, approximately KRW 18.7 trillion (about 60%) comes from steel. Around 40% of the city’s 35,800 manufacturing workers are also employed in the steel sector. When the steel industry fluctuates, the entire fiscal and economic structure of the city is affected.
Yet an even more fundamental transformation is approaching. The steel industry accounts for roughly 10% of global greenhouse gas emissions, and achieving carbon neutrality will require a shift from coal-based blast furnaces to hydrogen-based steelmaking and from fossil fuels to renewable energy. This is not simply a technological upgrade; it is a structural transformation of the industry, with far-reaching implications for local economies, employment, and communities.
Pohang, Gwangyang, and Dangjin together account for 93% of South Korea’s crude steel production. As decarbonization accelerates, the resulting impacts could shake the very foundations of these cities.
This transition is already underway globally. Steel cities in the UK, Japan, and Germany are each navigating the balance between decarbonization and protecting their local economies in different ways. By analyzing these cases, this article explores what Dangjin must begin preparing for now.
Four Pathways in Steelmakers’ Net-Zero Strategies
Steel companies around the world have pledged to achieve net-zero emissions by 2050 through hydrogen-based steelmaking, but the pathways to get there vary. Strategic choices differ depending on technological maturity, capital capacity, energy infrastructure, and policy environments. Broadly, these approaches can be categorized into four pathways.
In practice, steel companies do not rely on a single pathway. Instead, they combine multiple approaches to create their own transition portfolios. One important point to note is that pathways can differ even within the same corporate group. For example, while Nippon Steel as a whole follows a gradual blast furnace transition strategy, the Yawata site can be classified as an EAF-based transition. The international cases discussed in this article should be understood within this context.
Three Transition Cases that Made a Difference
Port Talbot, UK: A Transition Led by Government and Industry
Port Talbot closed its blast furnaces in 2024, with a transition to electric arc furnaces (EAF) targeted for 2027. This is a large-scale project worth £1.25 billion, including £500 million in government support.
A notable feature is the joint transition framework established by the UK central government, the Welsh government, and Tata Steel. Together, they formed a transition committee and created a £100 million transition fund to support a range of programs, including worker retraining, entrepreneurship support, supply chain diversification, and a regional industrial transition hub (SWITCH).
Since September 2024, around 2,800 blast furnace-related jobs have been lost. The UK government maintains that many of these impacts are being absorbed through internal redeployment, early retirement, and transition programs. However, the absence of a sharp spike in unemployment benefit claims does not necessarily indicate a successful transition.
Key questions remain: whether newly created jobs offer wages and conditions comparable to previous steel jobs, and whether these jobs are being created within Port Talbot itself. Most importantly, decision-making took place primarily between the company and government before labor unions and local communities were brought in. This sequence has contributed to distrust in the overall process, which in turn has fueled skepticism toward broader net-zero policies
Yawata, Japan: A Quiet Transition with Hidden Costs
Yawata began its transition by closing one blast furnace in 2020 and plans to convert its remaining another blast furnace into electric arc furnaces (EAF) with an annual capacity of 2 million tons by 2029–2030. While the Yawata site reflects an EAF-based transition, Nippon Steel as a whole is pursuing a more gradual strategy—maintaining blast furnace operations while exploring hydrogen-based steelmaking in the long term. In this sense, Yawata represents a selective restructuring of aging facilities within a broader, gradual transition pathway.
During this process, Nippon Steel avoided layoffs by relying on internal transfers, early retirement, and natural attrition to manage workforce adjustments. This approach is supported by Japan’s enterprise union system and long-standing practices of lifetime employment, which is notable for minimizing social conflict while protecting workers’ livelihoods during a large-scale industrial transition.
Another key structural factor is the Japanese government’s Green Transformation (GX) initiative, which has supported EAF investments with approximately ¥251.4 billion in subsidies. However, the transition has involved very limited public discussion, making it difficult to transparently assess both the costs and the outcomes. It also remains unclear to what extent the impacts on the local economy have been addressed.
Salzgitter, Germany: A Transition Co-Designed by Labor and Management
Salzgitter is often regarded as the case that most closely aligns with the principles of a just transition among the three. The company is pursuing the SALCOS program, a phased transition that combines hydrogen-based direct reduced iron (DRI) with EAF. This approach can be classified as a hybrid transition model.
In the initial phase, DRI processes relying primarily on natural gas are introduced, with hydrogen’s share gradually increasing over time as blast furnace operations are scaled down. Although the long-term goal is a production system centered on hydrogen-based DRI and EAF, the transition itself is characterized by the parallel operation of multiple processes, giving it a distinctly hybrid nature.
Of the total €2.5 billion investment, approximately €1.3 billion has been supported by federal and state governments. A defining feature of this case is Germany’s co-determination system (Mitbestimmung), which allows workers to directly participate in strategic decision-making through representation on supervisory boards and works councils. Principles such as employment and wage protection, along with paid retraining, were formalized through labor-management agreements.
The IG Metall union played an active role not only in supporting the transition but also as a policy actor, helping secure subsidies from federal and state governments. In addition, the regional transition network (ReTraSON) brings together stakeholders from the steel and automotive industries, research institutions, local governments, and civil society to collectively shape the future of industry and employment.
This case demonstrates that decarbonization does not have to lead to deindustrialization, but can instead drive industrial upgrading.
What Do These Transition Cases Mean for Dangjin?
Dangjin is home to blast furnaces at Hyundai Steel and EAF-based producers. The closure of carbon-intensive blast furnaces and the transition toward hydrogen-based steelmaking are central to decarbonization.
Hyundai Steel has set a target of achieving carbon neutrality by 2050, with an interim reduction target of 12% by 2030. However, its current strategy largely reflects a gradual transition approach, aiming to maintain blast furnace operations for as long as possible. While the company is pursuing gas-based DRI facilities in the United States, its operations in Dangjin remain limited to blending a certain proportion of scrap into blast furnace production.
Despite the dual pressures of an industry downturn and the need for decarbonization, there has yet to be a meaningful public discussion on how Hyundai Steel will accelerate its transition, or what this will mean for employment and the local economy in Dangjin.
Drawing on lessons repeatedly demonstrated by international cases, this article identifies three key priorities for Dangjin’s transition.
Building an Inclusive Table Before Decisions Are Made
Port Talbot’s biggest failure was not technological or financial; it was procedural. Decisions were made first by the company and government, and only afterward was a transition committee established. By the time labor unions and local communities joined, the direction had already been set. The result was a lingering distrust in the process, which ultimately translated into broader skepticism toward the transition itself.
Dangjin must reverse this sequence. From the earliest stages of discussing Hyundai Steel’s technological and investment direction, a transition council must be established to bring together all key stakeholders—central and local government, the company, labor unions, and civil society. The goal should not be damage control, but co-design. Moreover, this council must go beyond symbolic participation: it should be structured to ensure balanced authority and meaningful, ongoing engagement.
Subsidies Must Come with Conditions
Government support cannot be limited to financing corporate capital investments alone. In the Salzgitter case, the German federal and state governments provided approximately €1.3 billion in subsidies while simultaneously embedding conditions such as employment protection, worker retraining programs, and regional industrial strategies into the transition framework.
Similarly, in Dangjin, as discussions emerge around large-scale transition investments involving Hyundai Steel, public financial support must be explicitly tied to conditions such as employment guarantees, worker retraining, and regional supply chain diversification. In other words, financial support should be designed from the outset to drive not just corporate transformation, but a transition of the entire local economy and community.
Don’t Ask “How Many Were Trained,” Ask “Where Did They End Up?”
Input indicators, such as the number of training participants or programs delivered, are insufficient to assess the actual outcomes of a transition. In Port Talbot, thousands of training programs and hundreds of business support initiatives were implemented, yet it has been repeatedly pointed out that jobs created in the net-zero sector do not necessarily emerge in the same regions undergoing transition, nor do they always offer comparable wages and working conditions.
Dangjin must begin with different questions. What proportion of workers have transitioned into jobs that match their previous wages and working conditions? How many new green jobs are being created within Dangjin itself? These two indicators should be treated as core measures of success.
At the same time, Dangjin’s emerging industrial strategies—such as hydrogen, renewable energy, and recycling—must be explicitly embedded within a just transition framework. This goes beyond the transformation of a single company like Hyundai Steel. It requires positioning Dangjin within a broader regional strategy that connects to energy and industrial transitions across Chungcheongnam-do and the wider west coast region.
Port Talbot, Yawata, and Salzgitter demonstrate that even under the same pressure to decarbonize, transitions can take very different forms. As much as technological pathways matter, the question of who participates, when, and how ultimately shapes the nature of the transition.
For Dangjin’s steel transition to be remembered as a just transition, it must go beyond technical roadmaps such as hydrogen-based steelmaking or EAFs. It requires governance structures co-designed by government, industry, labor, and local communities; institutional guarantees for quality jobs; and a shared social agreement on how the costs and benefits of the transition are distributed.
Dangjin is the city that must begin this conversation now.
