Dive Brief:
- South Korea-based steel manufacturer Posco will take a 20% stake in Hyundai Steel’s electric arc furnace steel mill in Louisiana, according to a filing with the Securities and Exchange Commission Tuesday.
- Posco, through a new wholly-owned subsidiary, will invest $582 million in Hyundai Steel by the end of 2027. Hyundai first announced the project in March, with plans to invest $5.8 billion and produce 2.7 million metric tons of steel annually.
- Commercial production is expected to begin in 2029 and will focus on the production of steel plates for the automotive industry.
Dive Insight:
Steelmakers in Asia are establishing production/manufacturing footprints in North America, especially as automakers clamor for local supply and face steep tariffs on imported steel.
Posco said its investment in the Hyundai steel plant would help “secure a foundation for sustainable automotive steel production,” according to Tuesday’s SEC filing.
In March when Hyundai Steel announced the mill, the company said steel demand is “robust” in the United States and local production provides a “stable supply of high-quality, domestically produced steel plates.” This project is part of a broader $21 billion U.S. investment pledge by Hyundai Motor Group.
The Louisiana plant is Hyundai Steel’s first production site outside of South Korea, where the company is based, and will supply automotive steel plates to Hyundai Motor and Kia. In the future, Hyundai Steel also plans to expand sales to other U.S. automakers. In the future, Hyundai Steel also plans to expand sales to other U.S. automakers.
The steel mill’s location in Donaldsonville, Louisiana, is about 350 miles from Hyundai Motor’s manufacturing plant in Montgomery, Alabama. It’s also not far from Kia’s West Point, Georgia, facility and the Hyundai Motor Group Metaplant America facility in Savannah, Georgia.
The news of Posco’s 20% stake in the mill follows a memorandum of understanding between the steel manufacturer and Hyundai Motor, signed in April. The two firms agreed to cooperate on low-carbon-emissions steel production and battery materials.
The agreement allowed Posco to “secure a bridgehead for its entry into the North American steel market,” according to the MoU.
Posco has taken a particular interest in the North American automotive market, having also formed a joint venture with Honda. The automaker intended to invest $11 billion to build an electric vehicle production hub in Canada with Posco as a joint venture partner, although it postponed the plans by two years due to sluggish EV demand and tariffs.
In addition, Posco inked an MoU with Cleveland-Cliffs in September to further expand its presence in the United States. While the two companies haven’t disclosed full terms of their agreement, Posco is reportedly expected to invest more than $700 million to acquire at least a 10% stake in the U.S. steelmaker by next year, according to The Korea Economic Daily.
The agreements point to a pattern of Asia-based steel manufacturers investing to set up footholds in the United States. Most notably, Japan-based Nippon Steel recently acquired U.S. Steel in a $14 billion deal and allocated billions of dollars toward steel mill investments across the country.
With deals such as Nippon and U.S. Steel, Ian Myers, managing partner at Kalibr Partners, said there’s broader strategic decision-making at play.
“They fit this theme of moving things back near shore,” Myers told Manufacturing Dive. “It makes good business sense and good rationale to move that closer to where that steel is going to be needed.”
