Hyundai Steel and POSCO, Korean rival steel companies, have joined forces to invest in a steel mill in the United States to break the U.S. steel tariff barrier.
The two companies held a groundbreaking ceremony for the Hyundai-POSCO Louisiana Steel (HPLS) in Donaldsonville, Louisiana, on Sept. 4.
HPLS, capable of producing 1.7 million tons of steel annually, is the first steel mill being built by Korean companies in the United States.
Hyundai Motor has a U.S. facility for fabricating some kinds of steel products, such as cold- and hot-rolled steel, but HPLS is the first facility in the United States that will produce automobile sheets by extracting molten iron.
Hyundai Steel will take a 50 percent stake, followed by POSCO with a 20 percent share, while the remaining 30 percent will be divided evenly by Hyundai Motor and Kia Motors.
The total investments amount to a combined $5.9 billion (7.8 trillion won).
The United States raised tariffs on imported steel from 25 percent to 50 percent, effective from June 2025.
No tariffs are imposed on automobiles, produced with steel products based on U.S.-extracted molten iron, accounting for 70 percent or more.
As the Korean automobile industry, enjoying exports worth 50 trillion won to the United States, is threatened by steel tariffs, Hyundai Steel and POSCO, arch rivals in Korea, have shifted to a joint localization strategy.
Hyundai Motor Group Executive Chair Chung Eui-sun said at the ceremony, “Hyundai-POSCO Louisiana Steel (HPLS) will be the first dedicated automotive steel sheet mill in the U.S. based on an electric arc furnace, and it is also a first for Hyundai Steel.”
“By combining direct reduced iron and electric arc furnace technologies, we will produce premium low-carbon steel, which will be used for next-generation mobility by Hyundai Motor and Kia, as well as other automakers, and for AI data centers and power-generation facilities.”
Chung also pointed to potential demand from Hyundai Motor Group’s robotics business and the U.S. space industry.
POSCO Chmn. Jang In-hwa said at the event, “POSCO and Hyundai Steel compete in Korea, but they want to raise their standing by cooperating with each other abroad.”
Construction is to start in the fourth quarter of this year and commercial production is slated for the first quarter of 2029.
Hyundai Motor Group has almost completed a vertical integration process that encompasses molten iron and automobiles about 20 years after the group built its first automobile production plant in Alabama in 2005.
POSCO will secure a molten iron production center without replying on its own massive investment.
HPLS will employ an electric arc furnace instead of a blast furnace using iron ore and coal since the former, with less carbon emissions, is considered to be under less regulatory pressure in a long-term perspective.
The electric arc furnace has a weak point of producing lower quality grade automobile sheets, but the weakness can be overcome by the direct reduced iron technology.
HPLS will have strengths – lowering unit price by using U.S.-produced liquefied natural gas and its location at the basin of the Mississippi River at one of three production belts in Southern U.S. that is accessible by boats and railway.
Louisiana Governor Jeff Landry, a prominent ally of U.S. President Donald Trump, who has also been tapped as the administration’s special envoy to Greenland, welcomed the project, saying Hyundai Steel’s investment would create quality jobs and provide new opportunities for local businesses.
The project is expected to give Hyundai and Kia greater flexibility in sourcing steel locally, while strengthening their ability to respond to trade barriers and rising demand for locally manufactured products.
HPLS will produce 2.7 million tons of steel products, including 1.8 million tons of automobile sheets, annually.
Out of the total, 800,000 tons of steel products are to be supplied to U.S. plants of Hyundai Motor and Kia Motors.
At least 600,000 tons of steel products are to be consumed by POSCO, its U.S. clients and its corporate entity in Mexico.
HPLS will have to find consumption clients on the remaining 1.3 million tons of steel products.
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