Hyundai Motor Group on Monday announced a new investment plan worth 1.12 trillion won ($1 billion) as part of its efforts to elevate its competitiveness in next-generation automotive material development.

The Korean auto giant, which owns the Hyundai and Kia brands, said it would build two factories that produce specialty steel and high-quality iron powder ― the two key materials used in vehicle engines and transmissions.

The latest investment plan, the carmaker said, comes as a growing number of global automotive companies are teaming up with auto parts manufacturers with an aim to secure their competitive edge in the market. 

“Hyundai has decided to play a bigger role from the very beginning of material development, speeding up the launch of its new quality control system,” the group said in a statement on Monday.

Hyundai Steel, the second-largest Korean steelmaker and a Hyundai affiliate, plans to complete the construction work of the specialty steel plant by September near its Dangjin steel mill in South Chungcheong Province.

Its production is scheduled to start in the latter half of this year, with an annual output nearing 1 million tons.

Construction of another plant is also underway near the site to produce 25,000 tons of iron powder starting next year.

Hyundai predicted that the new facilities will positively affect the nation’s overall economy, generating added value worth 6.1 trillion won and creating 22,000 jobs. 

The facilities will also improve the nation’s trade balance considering Korea has imported 2.31 million tons of specialty steel, about 30 percent of domestic demand, and all the 70,000 tons of iron powder consumed here from abroad.

By Lee Ji-yoon (jylee@heraldcorp.com)