POSCO confirms $582 mln investment on Hyundai Steel's US Plant

Posco Group and Hyundai Steel have finalized their investment terms relating to Hyundai's Steel's new greenfield, 2.7 million tonnes/year steel plant planned for Donaldson, Louisiana, that will supply mostly automotive sheet to the North American customers of the two South Korean steelmakers. The total investment in the project is estimated at $5.8 billion, or about KRW 8.5 trillion, making it one of the largest overseas steel investments by Korean companies, Korea's Maeil Business News observed.

In a filing with South Korea's Financial Supervisory Service on Tuesday, POSCO Holdings said it had decided to invest $582 million or KRW 858.6 billion won in the new plant to take a 20% stake in the project, via the tentatively-named POS-Louisiana, a newly established local subsidiary.

Of the remaining 80%, Hyundai Steel will hold a 50% stake, equivalent to $1.46 billion and will be the largest shareholder, while Hyundai Motor – Hyundai Steel's parent – and sister company Kia Corp will each invest $440 million for 15% stakes, according to the finalised shareholding agreement.

The agreement bringing the two erstwhile Korean steel rivals together in their first US project confirms local Korean media reports in early April which said that POSCO was considering buying into Hyundai's Donaldson plant. At the time, POSCO was non-committal, saying that it was "reviewing various strategies with regard to U.S. investment but no decisions have been made," as Mysteel Global reported.

The Louisiana steel plant is widely viewed as a survival strategy to deal with steeper US tariff on the steel sector of South Korea under Trump's second administration and strengthen the production capacity in low-carbon steel.

The U.S. government reimposed a 25% tariff on steel imports from all countries including South Korea on March 4, and Trump further raised the tax rate on South Korea to 50% which has been effective since June 4, dealing a huge blow to the country's steel sector.

The Louisiana plant is set to commence operation in the first quarter of 2029. The EAF integrated steel mill will use rich resources of steel scrap in the U.S. to produce low-carbon automotive steel sheets for the US and Mexico markets, according to Korean observers.

POSCO joining its Louisiana project offers several advantages for Hyundai Steel. For example, POSCO is exploring new technology such as its HyREX process that uses iron ore and hydrogen to produce direct reduced iron as a pure feedstock for EAFs, as reported, which might be used not only in Donaldson, but Hyundai Steel might also adopt it for its mini-mills in Korea, as Mysteel Global noted.

Written by Bruce Wei, weizhanyi@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com