Combating High Tariffs! POSCO and Hyundai Steel Jointly Build Steel Plant in the US

According to The Korean Herald, South Korea's two largest steel manufacturers are joining forces in the United States, with POSCO Group acquiring a 20% stake in a new $5.8 billion steel plant planned by Hyundai Steel in Louisiana.

POSCO Holdings stated in a regulatory filing on Tuesday that it will invest $582 million to acquire a 20% stake in Hyundai Steel’s electric arc furnace facility in Donaldsonville, Louisiana. The investment will be made through a newly established local subsidiary, Posco Louisiana.

This investment builds upon a memorandum of understanding signed in April between POSCO Group and Hyundai Motor Group for cooperation in the steel and secondary battery sectors. The two companies have taken the next step by formalizing their partnership through a regulatory filing that details the ownership structure and financing plan for the U.S. project.

This rare alliance between competitors comes at a time when South Korean steel manufacturers are facing high tariffs of up to 50% in the United States. Establishing domestic production facilities will allow these companies to mitigate tariff risks while strengthening their response to the growing demand for low-carbon steel.

Hyundai Steel, the steel manufacturing division of Hyundai Motor Group, announced in a disclosure that the Louisiana plant is scheduled to commence commercial production in the first quarter of 2029. The $5.8 billion project will be equally divided between equity and external borrowing, with each allocated $2.9 billion.

According to the equity structure, Hyundai Steel will invest $1.46 billion for a 50% stake in the new subsidiary, Hyundai Steel Louisiana LLC, which will operate the new steel plant. Hyundai Motor and Kia will each hold a 15% stake, with investments of $440 million each, while POSCO will hold the remaining 20% stake.

The plant, with an annual capacity of 2.7 million tons, will focus on producing automotive steel sheets for the U.S. and Mexican markets. It will include raw material facilities for producing direct reduced iron, electric arc furnaces, and hot- and cold-rolled steel production lines.

An official from POSCO stated, "By partnering with Hyundai Steel, we will secure local production facilities with electric arc furnace technology and commit to overcoming U.S. tariff barriers to ensure a stable supply of low-carbon steel products to the North American market."