Hyundai Motor Group and POSCO Group have broken ground on an electric arc furnace steel mill dedicated to automotive steel sheet production in Donaldsonville, Louisiana. With a total investment of $5.8 billion (approximately 7.8 trillion won), the project is being viewed as a watershed moment for South Korea’s steel industry as it pivots to local production amid the United States’ 50% tariff on imported steel.<\/p>\n
The groundbreaking ceremony held on the 4th (local time) drew top executives from both groups, including Hyundai Motor Group Chairman Euisun Chung, POSCO Group Chairman Chang In-hwa, Hyundai Steel CEO Lee Bo-ryong, Hyundai Motor CEO Jos\u00e9 Mu\u00f1oz, and Kia CEO Song Ho-sung. Representing the South Korean government were Minister of Trade, Industry and Energy Kim Jung-kwan and Ambassador to the United States Kang Kyung-wha, while Louisiana Governor Jeff Landry, U.S. Commerce Under Secretary for International Trade William Kimmitt, and federal lawmakers attended on the American side.<\/p>\n
The Hyundai Steel-POSCO Louisiana Electric Arc Furnace Steel Mill (HPLS) is the first integrated automotive steel sheet mill in the United States\u2014and the world\u2014to be based on electric arc furnace technology. Hyundai Steel holds a 50% stake, Hyundai Motor and Kia each hold 15%, and POSCO holds 20%. Hyundai Motor Group controls 80% of the venture, giving it operational leadership.<\/p>\n
7.37 Million Square Meter Site Along the Mississippi River; Mass Production Targeted for 2029<\/p>\n
The steel mill will be built on a 7.37 million square meter (approximately 2.23 million pyeong) site along the lower Mississippi River\u2014roughly 2.5 times the size of Yeouido. Donaldsonville offers a waterway network connecting to the Gulf of Mexico via the Mississippi River, providing advantages for transporting raw materials and finished products. Hyundai Steel plans to build a port capable of accommodating Panamax-class vessels.<\/p>\n
The area is also a representative industrial hub in the southern United States, with an established petrochemical and steel industry cluster. Louisiana is pursuing the Riverplex Mega Park, a massive industrial complex, and HPLS will serve as a core pillar of this development alongside low-carbon ammonia production and carbon capture and storage (CCS) projects.<\/p>\n
Site preparation is currently underway, with Hyundai Steel planning to begin construction in the fourth quarter of this year and targeting mass production in the first quarter of 2029. Permitting is proceeding in parallel. Louisiana environmental authorities began soliciting public comments earlier this month on air quality permits for the facility.<\/p>\n
Electric Arc Furnaces Cut Carbon Emissions 70% Versus Blast Furnaces; Annual Capacity of 2.7 Million Tons<\/p>\n
HPLS will have an annual production capacity of 2.7 million tons, including 1.8 million tons of automotive steel sheet and 900,000 tons of general-purpose steel. Up to 40% of the automotive steel sheet output will be supplied to Hyundai and Kia’s U.S. plants, with the remainder sold to other automakers operating in the United States, including GM, Volkswagen, and Honda.<\/p>\n
The centerpiece is the direct reduced iron (DRI) production facility, known as the DRP. Using natural gas to reduce iron ore to pure iron in a solid state, this process generates significantly less carbon dioxide than coal-based blast furnace operations. HPLS will feed DRI from the DRP directly into electric arc furnaces within the same facility, enabling production of higher-grade products than conventional electric arc furnaces that rely solely on scrap steel.<\/p>\n
Hyundai Steel officials explained that electric arc furnace molten steel can reduce carbon dioxide emissions by approximately 70% compared to blast furnace output. If clean hydrogen prices decline in the future, the company may explore replacing natural gas with hydrogen.<\/p>\n
South Korea’s Top Two Steelmakers Join Forces Amid 50% Tariff Barrier<\/p>\n
The joint venture comes against the backdrop of U.S. trade pressure. In May of this year, the United States raised tariffs on foreign steel products from 25% to 50%. South Korea’s steel exports to the U.S. fell 8% year-over-year, from 2.76 million tons to 2.54 million tons.<\/p>\n
The decision by Hyundai Steel and POSCO\u2014competitors in South Korea’s domestic automotive steel sheet market\u2014to join forces as co-investors in the United States is unprecedented. As the price competitiveness of exporting steel from South Korea to the U.S. has eroded, the two companies have pivoted to a localization strategy of producing directly in the United States, where demand exists.<\/p>\n
The structural supply shortage in the U.S. steel market is another factor behind the investment. According to the World Steel Association (WSA), the United States produced 82 million tons of crude steel last year, ranking third globally, but still imports more than 20 million tons annually to meet demand. High-value flat products such as hot-rolled and cold-rolled coated steel account for over 10 million tons of imports each year\u2014more than 50% of total steel imports. U.S. domestic hot-rolled steel prices are more than 30% higher than those in Asia and Europe.<\/p>\n
Tariffs on Equipment and Materials Remain a Challenge<\/p>\n
While local production alleviates the 50% tariff burden on imported steel, tariffs on equipment and materials needed for plant construction remain a separate issue. Some equipment and materials cannot be sourced in the United States and must be imported from South Korea and other countries.<\/p>\n
South Korean Trade Minister Kim Jung-kwan used the occasion to request that the U.S. government ease tariff burdens on plant equipment and materials that are difficult to source locally. “When South Korea’s world-class steel technology and manufacturing capabilities meet America’s abundant energy resources and workforce, it leads to overwhelming industrial opportunities,” he said.<\/p>\n
In his welcoming remarks, Chairman Euisun Chung said, “The steel products produced here will contribute not only to Hyundai Motor Group but also to other automakers producing next-generation mobility,” adding that this represents “a starting point for the steel industry’s journey toward a more resource-circular and sustainable future.”<\/p>\n
Governor Landry said, “Hyundai Steel chose Louisiana for its first North American steel mill because of our skilled workforce, infrastructure, and excellent business environment,” adding that “quality jobs will be created and new opportunities will open for local businesses.”<\/p>\n
POSCO to Leverage HPLS as Strategic North American Foothold<\/p>\n
POSCO plans to use HPLS as a strategic foothold for entering the North American steel market. Steel materials produced at HPLS will also be supplied to POSCO Mexico, the company’s automotive steel sheet production subsidiary in Altamira, Mexico.<\/p>\n
POSCO decided on the joint investment under its “fully integrated localization strategy,” which aims to complete the entire value chain\u2014from raw material procurement to production, sales, and service\u2014locally. The decision reflects the company’s assessment that demand for high-value, low-carbon automotive steel sheet is growing in North America.<\/p>\n
HPLS is a core component of the $21 billion U.S. investment that Chairman Chung announced at the White House in March of last year, with President Trump in attendance. Hyundai Steel established its North America Steel Business Division in May of last year and incorporated Hyundai Steel Louisiana in June. In December of last year, the company signed main equipment contracts with Italy’s Danieli and Germany’s SMS Group. In March of this year, it signed a power supply agreement with U.S.-based Entergy and an MOU with France’s Fives for cold-rolling equipment supply.<\/p>\n
Hyundai Motor Group has stated its intention to produce 80% of new vehicles sold in the United States locally. Once HPLS is operational, it will directly supply automotive steel sheet to Hyundai Motor Group Metaplant America (HMGMA) in Georgia, Hyundai Motor Manufacturing Alabama (HMMA), and Kia Georgia (KMMG). The move effectively completes vertical integration\u2014from steel production to finished vehicle manufacturing\u2014in the United States.<\/p>\n","protected":false},"excerpt":{"rendered":"Hyundai Motor Group and POSCO Group have broken ground on an electric arc furnace steel mill dedicated to…\n","protected":false},"author":2,"featured_media":143738,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[380],"tags":[73032,73030,6075,593,293,1709,73031,2215,603,442],"class_list":["post-143737","post","type-post","status-publish","format-standard","has-post-thumbnail","category-posco","tag-direct-reduced-iron","tag-electric-arc-furnace-steel-mill","tag-euisun-chung","tag-hpls","tag-hyundai-motor-group","tag-hyundai-steel","tag-jeff-landry","tag-kim-jung-kwan","tag-louisiana","tag-posco"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/143737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=143737"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/143737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/143738"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=143737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=143737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=143737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}