Home > Business > Industry

Steel rivals join hands: Posco invests in Hyundai steel mill in face of tariff risk

Published: 21 Apr. 2025, 17:58 Updated: 21 Apr. 2025, 18:15

Han Seok-won, executive vice president and head of strategy and planning at Hyundai Motor Group, fourth from left, and Posco Holdings President Lee Joo-tae shake hands during an MOU signing at Hyundai Motor’s offices on April 21. [HYUNDAI MOTOR]

Hyundai Motor Group and Posco Group signed a memorandum of understanding to deepen cooperation in steelmaking and secondary battery materials as both companies seek to adapt to shifting trade dynamics spurred by rising U.S. tariffs on steel and autos.

The two conglomerates announced the agreement on Monday following a signing ceremony at Hyundai’s headquarters in southern Seoul.

Han Seok-won, executive vice president and head of strategy and planning at Hyundai Motor Group, and Lee Joo-tae, president and head of future strategy at Posco Holdings, attended the event.

The partnership centers on joint investment and production at a new electric arc furnace steel mill Hyundai is building in Louisiana. The $5.8 billion project aims to produce 2.7 million tons of hot-rolled and cold-rolled steel annually, primarily for use in automotive manufacturing.

Posco will co-invest in the project, helping Hyundai secure about half the external funding required. The two sides are still negotiating the exact equity structure.

Hyundai Steel, the group's steelmaking affiliate, will supply steel produced at the facility to Hyundai's and Kia’s U.S. plants, as well as those of other global carmakers. Posco is in discussions to secure a portion of the output for its own sales in the region.

The move allows Posco to establish a production foothold in the United States without having to build a full-scale steel mill. The group currently operates processing centers in the United States and an automotive steel plant in Mexico but lacks primary production capabilities in the region.

Since taking the helm last year, Posco Group Chairman and CEO Chang In-hwa has emphasized localized, end-to-end production as a strategic priority. The partnership with Hyundai reportedly gained momentum after discussions between Chang and Hyundai Motor Group Executive Chair Euisun Chung in the second half of last year.

Hyundai Motor's offices in Gangnam District, southern Seoul on Sept. 8, 2024 [YONHAP]

The two groups also plan to expand collaboration in the secondary battery supply chain, including lithium and anode materials — key ingredients in electric vehicle batteries. Posco currently produces lithium hydroxide in Argentina and Korea and manufactures battery-grade cathodes and anodes in Pohang, North Gyeongsang, and Gwangyang, South Jeolla, as well as China and Canada under its subsidiary Posco Future M.

Hyundai said the agreement would help secure essential raw materials in response to shifting global supply chains and tightening trade regulations mandated by the United States and European Union.

Hyundai and Posco will also seek opportunities to cooperate in developing next-generation materials, exploring areas where the two industrial giants can generate synergy over the long term.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY LEE SU-JEONG [[email protected]]