As part of its plan to deal with US President Donald Trump's broad tariffs on steel imports, POSCO Group, the top steelmaker in South Korea, announced that it will invest in Hyundai Steel Co.'s steel plant project in the US.
POSCO Group reportedly inked a memorandum of understanding with Hyundai Motor Group to increase cooperation in the steel and rechargeable battery industries as well as to participate in Hyundai Steel's US factory.
Hyundai Steel announced last month that it will invest $5.8 billion to construct an integrated steel mill in Louisiana that would use electric arc furnaces by 2029. Production is expected to start the same year.
It is anticipated that the 2.7 million-ton-per-year factory will supply steel to Hyundai Motor Co., Kia Corp., and other automakers in the US, which is the most significant vehicle market in the world.
Following the Trump administration's implementation of 25% tariffs on all imports of steel and aluminum in mid-March, POSCO made its investment decision.
Equity participation is one of the possibilities being considered for investment in upstream steel processes in the United States, as previously stated by POSCO Group.
According to reports, the extent of its involvement in the plant project is still unknown. It is anticipated that discussions to determine the investment ratio and other relevant issues will shortly start.
POSCO Group Chairman Chang In-hwa emphasized the importance of international expansion in a recent address to staff members.
"With a sense of crisis that the company will fall behind if it does not act swiftly, we must invest in steel mills in fast-growing and high-margin regions, such as the US and India, to achieve meaningful results," he said.
POSCO Group anticipates that the MOU would strengthen its collaboration with Hyundai Motor Group, which has lasted for five decades. POSCO is one of the automaker's main suppliers of automobile steel.
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As part of the initial deal, POSCO will work with Hyundai to develop materials for rechargeable batteries to support future mobility solutions, in addition to supplying steel made in the new Louisiana plant to clients in the US and Mexico, the company said.