Posco takes 20% stake, joins Hyundai Steel in $5.8b US plant

Hyundai Steel's plant in Dangjin, South Chungcheong Province (Hyundai Steel)

South Korea’s two largest steelmakers are joining forces in the US, with Posco Group acquiring a 20 percent stake in a new $5.8 billion steel plant that Hyundai Steel plans to build in Louisiana.

In a regulatory filing Tuesday, Posco Holdings said it will invest $582 million for a 20 percent stake in Hyundai Steel’s electric arc furnace facility in Donaldsonville, Louisiana. The investment will be made through Posco Louisiana, a newly established local subsidiary.

The investment builds on a memorandum of understanding signed in April between Posco Group and Hyundai Motor Group to cooperate in the steel and secondary battery sectors. The companies took the next step by formalizing their partnership through a regulatory filing detailing the US project’s ownership structure and financing plan.

The rare alliance between the rivals comes as South Korean steelmakers face steep US tariffs of up to 50 percent. Establishing domestic production facilities will allow the companies to mitigate tariff risks while strengthening their response to growing demand for low-carbon steel.

Hyundai Steel, the steel-making unit of Hyundai Motor Group, announced in a disclosure that the Louisiana facility is slated to start commercial production in the first quarter of 2029. The $5.8 billion project will be split evenly between equity and external borrowing, with $2.9 billion allocated to each.

Under the equity structure, Hyundai Steel will invest $1.46 billion for a 50 percent stake in a new subsidiary, Hyundai Steel Louisiana LLC, which will operate the new steel mill. Hyundai Motor and Kia will each own 15 percent, contributing $440 million each, while Posco will hold the remaining 20 percent stake.

With an annual capacity of 2.7 million metric tons, the facility will focus on manufacturing automotive steel sheets for the US and Mexico markets. It will include raw material facilities producing direct reduced iron, electric arc furnaces and hot-rolled and cold-rolled steel production lines.

"By working with Hyundai Steel, we will secure a local production base for electric arc furnace technology, and aim to overcome US tariff barriers and ensure a stable supply of low-carbon steel products to the North American market," an official at Posco Holdings said.