POSCO and Hyundai to build steel plant as part of joint investment project
POSCO and Hyundai are working together on a project in the United States. They plan to build a steel mill in Louisiana. The project will require an investment of USD 5.8 billion. The new plant will enable the partners to circumvent the updated tariff rules introduced by the U.S. administration.
According to project documentation, the plant will produce approximately 2.7 million tons of steel per year. Additionally, the enterprise will create 1,400 new jobs in the region. The plant should reach full production capacity by 2029. The project’s strategic importance should be noted. POSCO is the leading steel producer in South Korea. The corporation has partnered with Hyundai, which owns the second-largest steel mill in the country in terms of production volume.
The significance of the plant for the partners
Hyundai announced that the new venture will focus on producing steel for the automotive industry. The plant will supply the company’s production facilities in the US with raw materials.
Additionally, Hyundai and POSCO are exploring opportunities for further collaboration. Plans include developing joint projects in battery technology for environmentally friendly transportation. The partners also intend to strengthen supply chains in the U.S. and Europe. All initiatives will be implemented by the relevant jurisdictions’ regulatory requirements.
Plant construction is an important step for Hyundai and is part of its business development strategy in the U.S.:
– the company is implementing an investment plan for 2025–2028;
– the strategy includes allocating USD 21 billion to expand operations in the U.S.;
– the Louisiana plant is part of the designated program.
However, Hyundai’s large investments in the US are largely dictated by external economic conditions. Tough tariff measures introduced by the Donald Trump administration have complicated foreign companies’ work in the American market. In particular, import duties on South Korean products reach 25%. Given these conditions, many international corporations, including Hyundai, are reevaluating their strategies and increasing production localization in the U.S.
POSCO’s interest
For POSCO, participating in a joint project with Hyundai is a strategic opportunity to strengthen its position in the U.S. market. The steelmaker will cover some of the construction costs of the plant. In return, POSCO will secure a share of the output, which will help reduce the tariff burden for its partners. In turn, Hyundai intends to raise funds for the project through external investments and a credit line from POSCO.
The opportunity to enter the US market is extremely important for the steel giant. About 10 years ago, POSCO’s attempts to operate in the U.S. were unsuccessful. The company had planned to build plants but abandoned the idea due to the high cost of labor. This partnership will reduce costs and allow for increased sales.
