Posco and Hyundai Motor Group on Monday signed a deal that will see Korea’s top steelmaker jointly invest in the automaker’s steel mill in Louisiana, to secure tariff-exempt supply chains and cooperate on carbon-neutral EV technology. 

Under the memorandum of understanding (MOU), Posco will invest an undisclosed amount into Hyundai Motor’s steel factory that the carmaker had recently announced it will use $5.8 Billion to construct, according to Posco Holdings on Monday. 

This marks Posco’s entry into the United States, which has been barred by trade protectionism. The firm currently does not operate any steel production facilities in the country and supplies carmakers in the area through metal processing centers, such as its automotive steel plant in Mexico.   

Posco expects the U.S. location to allow it to efficiently supply materials within the United States and to Mexico, giving the firm the choice of flexible production and sales, the steelmaker said in a statement.   

The two groups also plan to cooperate on developing sustainable materials by incorporating Posco’s battery materials and Hyundai Motor’s eco-friendly mobility technology.  

The two firms discussed the agreement last year in anticipation of the shifting secondary battery market and to realize Posco's localization strategy in high-growth overseas steel markets, Posco said.

Executives including Han Seok-won, executive vice president and head of strategy and planning at Hyundai Motor Group, and Posco Holdings President Lee Joo-tae were present at the MOU signing at Hyundai Motor’s offices on Monday. 

“By leveraging the synergy between the two companies, we can find sustainable growth solutions across our entire business portfolio, including steel and secondary battery materials, amid global trade pressure and shifting industry paradigms,” Lee said through the firm’s statement.   

Hyundai Motor Group Executive Chair Euisun Chung announced in March that the firm will invest $21 Billion in U.S. facilities including the Louisiana steel mill and Hyundai Motor’s Georgia plant as well as in renewable energy initiatives and EV charging infrastructure in the United States to avoid potential tariffs and automobile duties. 

The Louisiana electric steel plant that Posco will jointly invest in is planned to finish construction by 2029 and have an annual production capacity of 2.7 Million tons, with a specialization in auto steel plates.

Source: KOREA JOONGANG DAILY