South Korean steelmaker Posco Group’s plan to set up a holding company, Posco Holdings, was approved by the board Friday, buoying expectations that the steelmaker will extend its business areas to hydrogen fuel cells, advanced materials and renewable energy. 

Under the plan, the group’s steelmaking arm will be physically split off and will be placed under the planned holding company. The envisioned holding company is expected to hold a 100 percent stake in the steelmaking unit and will be given advantage of securing additional investment for new businesses, according to officials. 

The bill endorsed by the board will be put into vote during a shareholders meeting early next year.

But the split-off scheme faces a major hurdle, as it must get approval from major shareholders such as the National Pension Service. The pension operator is the largest-single shareholder of Posco shares with 11.75 percent. 

Previously, the NPS has expressed objections to the spinoff plans of LG Chem and SK Innovation.

Market experts said that Posco Group has been persuading individual shareholders to approve its split-off scheme to explore new businesses and change its typecast image as a steelmaker amid growing pressure to curb carbon emissions. 

A green energy strategy was to be discussed at the board. The steelmaker plans to expand producing 7 million tons of hydrogen by 2050 by the current goal of 5 million. 

Posco is seeking to transform its governance structure to better respond to ESG trends, expand investment in new business such as secondary battery materials and hydrogen and enhance its value in the stock market. 

The group’s steelmaking arm Posco has been controlling subsidiaries with its ownership of majority stakes. It has 61.3 percent stake in Posco Chemical, 52.8 percent in Posco Engineering and Construction and 62.9 percent in Posco International.