Hyundai Motor Group and POSCO Group broke ground on the 4th (local time) to begin steel production in the United States. Hyundai Motor Group and POSCO Group held a groundbreaking ceremony that day in Donaldsonville, Ascension Parish, Louisiana, for the "Hyundai Steel–POSCO Louisiana electric arc furnace steel mill (HPLS·HYUNDAI-POSCO Louisiana Steel)" and embarked in earnest on building a local production system for automotive steel sheets.
현대자동차그룹과 포스코그룹이 4일(현지 시각) 미국 현지 철강 생산을 위한 첫 삽을 떴다. 현대차그룹과 포스코그룹은 이날 미국 남부 루이지애나주 어센션 패리시 도널슨빌시(市)에서 '현대제철-포스코 루이지애나 전기로 제철소(HPLS·HYUNDAI-POSCO Louisiana Steel)' 기공식을 열고 현지 자동차용 강판 생산체계 구축을 위한 본격적인 행보에 들어갔다.
HPLS is the first electric arc furnace-based steel mill in the United States specialized in automotive steel sheets. In the United States, which ranks No. 2 in annual auto sales after China, Korean steelmakers are building the first electric arc furnace steel mill to produce automotive steel sheets. HPLS is viewed as a symbolic project in which Korean corporations, responding to the U.S. trade stance under President Donald Trump of raising trade barriers, strengthen Korea-U.S. economic cooperation through large-scale investment in the United States.
HPLS will be built as a joint venture led by Hyundai Motor Group with POSCO Group participating through an equity investment. Total investment is $5.8 billion (about 7.85 trillion won). Hyundai Steel will invest 50% equity, Hyundai Motor and Kia 15% each, and POSCO 20%.
Regulatory permitting for the steel mill is underway. Hyundai Steel, which oversees the construction and operation of the HPLS electric arc furnace steel mill, aims to break ground in the fourth quarter and begin mass production in the first quarter of 2029.
◇ Total investment of $5.8 billion… Building an independent supply chain by producing steel in the U.S.
The HPLS electric arc furnace steel mill will be built on a 7.37 million㎡ (about 2.23 million pyeong) site downstream of the Mississippi River. Donaldsonville, Louisiana, is considered to have excellent logistics infrastructure for transporting raw materials and products thanks to a waterways network that connects to the Gulf of Mexico via the Mississippi River. Louisiana is also a representative industrial hub in the American South, with a petrochemical and steel industry cluster.
About 250 people attended the groundbreaking ceremony that began at 3 p.m. (5 a.m. on the 5th in Korea). From Hyundai Motor Group, attendees included Chair Chung Eui-sun; Hyundai Steel President Lee Bo-ryong; Hyundai Motor President José Muñoz; Kia President Song Ho-sung; Hyundai Motor Group President Sung Kim; and Hyundai Motor Group President Seo Gang-hyun. From POSCO Group, attendees included Chair Chang In-hwa and Executive Vice President Kim Gwang-mu.
From the Korean government, attendees included Minister Kim Jung-kwan of the Ministry of Trade, Industry and Resources, Ambassador to the U.S. Kang Kyung-hwa, and Consul General in Houston Lee Kyung-eun. From the U.S. side, Louisiana Gov. Jeff Landry, William Kimmitt, Commerce Department undersecretary for international trade, Democratic Rep. Troy Carter, and Republican Rep. Julia Letlow attended to offer congratulations.
Chair Chung Eui-sun said in a welcome address that "the steel products produced here will contribute to the production of next-generation mobility not only for Hyundai Motor Group but also for other automakers." Regarding building an electric arc furnace steel mill, which emits less carbon than a blast furnace, Chung said, "This is a starting point for the steel industry to move toward a more resource-circulating and sustainable future, proving here in Louisiana that innovation and sustainability can coexist."
Louisiana Gov. Jeff Landry said in congratulatory remarks, "Hyundai Steel chose Louisiana as the site of its first North American steel mill because of our skilled workforce, infrastructure and excellent business environment, and Hyundai Steel's investment will create quality jobs and open new opportunities for local corporations." Landry, a Republican politician close to President Trump, is known to have arranged a meeting with the president when Chung announced the investment at the White House in March last year.
Minister Kim Jung-kwan of the Ministry of Trade, Industry and Resources said, "When Korea's world-class steel technologies and manufacturing capabilities meet America's abundant energy resources and workforce, it leads to overwhelming industrial opportunities," adding, "Connecting each other's strengths to jointly enhance both countries' competitiveness is the new face of Korea-U.S. cooperation."
The HPLS electric arc furnace steel mill is a core project of the $21 billion investment in the United States that Chung announced at the White House in March last year under the watch of President Trump. Hyundai Steel prepared for HPLS by creating the North America steel business division, a dedicated U.S. business unit, in May last year and establishing Hyundai Steel Louisiana in June last year.
In December last year, after signing main equipment contracts with Italian steel equipment company Danieli and German heavy equipment company SMS, the company in March this year signed a power supply contract with U.S. energy company Entergy and a memorandum of understanding (MOU) for mutual cooperation on cold-rolling equipment supply with French industrial engineering company Fives.
◇ Producing 2.7 million tons a year with an electric arc furnace… Targeting U.S. demand for "low-carbon" automotive steel sheets
Hyundai Steel plans to make the HPLS electric arc furnace steel mill a key production base for its transition to a lower-carbon production system. HPLS will be equipped with an integrated process system that can produce everything from raw materials to finished products within the mill. It will directly produce and feed direct reduced iron (DRI), a steelmaking raw material, into the electric arc furnace, instead of procuring it externally, and make it into finished products.
The core of producing lower-carbon products is DRP, the facility that produces direct reduced iron (a facility that reduces iron ore to pure iron in a solid state using natural gas). Because DRP uses natural gas, it has the advantage of generating less carbon dioxide than the blast furnace process that uses coal. In addition to the first-stage DRP, the HPLS electric arc furnace steel mill will include a steelmaking plant equipped with an electric arc furnace, a refining furnace, and a continuous casting facility (which turns molten steel at high temperature into intermediate materials); a hot-rolling mill that produces hot-rolled steel sheets; and a cold-rolling mill that produces automotive steel sheets such as cold-rolled and coated steel sheets.
A Hyundai Steel official said, "Compared with blast furnace molten steel, electric arc furnace molten steel can reduce carbon dioxide emissions by about 70%, and by directly linking DRP and the electric arc furnace within the same plant, we can further improve efficiency and productivity," adding, "This will enable production of higher-grade products than existing electric arc furnaces that use only steel scrap."
The HPLS electric arc furnace steel mill will have capacity to produce 2.7 million tons of steel products annually. Of that, 1.8 million tons will be for automotive use, and 900,000 tons for general use. Up to about 40% of the automotive steel sheets will be supplied to Hyundai Motor and Kia's U.S. plants, with the rest sold to U.S. automakers. With a shortage of high-performance steel supplies, Hyundai Steel expects demand from other U.S. automakers to be solid.
◇ POSCO also invests 20% equity… Accelerating entry into the North American market
The HPLS electric arc furnace steel mill will be established through a joint investment by Hyundai Motor Group and POSCO Group. Hyundai Motor Group will hold 80% equity (Hyundai Steel 50%, Hyundai Motor 15%, Kia 15%), and POSCO will hold 20%. Equity contributions by each company began in January this year, launching HPLS.
POSCO decided to pursue the HPLS joint investment under its end-to-end localization strategy. The end-to-end localization strategy refers to a system that completes the entire process locally, from raw material procurement to product production, sales and service. Concluding that demand for high-value, low-carbon automotive steel sheets is rising in North America, POSCO has moved to build a local production and supply system there.
POSCO plans to use the HPLS electric arc furnace steel mill as a strategic foothold for entering the North American steel market. It also plans to supply steel materials produced at HPLS to POSCO Mexico, its automotive steel sheet production subsidiary in Altamira, Mexico.