Steelmaker to counter import tariffs with first plant in Lousiana
Hyundai Steel, Hyundai Motor Group’s steel manufacturing subsidiary, vowed Tuesday to invest $5.8 billion in building its first US plant in Louisiana as part of the Korean auto giant’s strategy to complete a local vehicle supply chain.
The electric arc furnace steel plant, the first of its kind in the US, is set to begin commercial production of automotive steel sheets by 2029, boasting an annual production capacity of 2.7 million metric tons. Compared to traditional blast furnace facilities, it minimizes carbon emissions by up to 75 percent. It will include facilities for direct reduced iron and hot-rolled and cold-rolled steel sheets.
The facility — strategically located near Hyundai Motor’s Alabama plant, Kia’s Georgia plant and the newly opened Hyundai Motor Group Metaplant America in Georgia — will primarily supply steel sheets for Hyundai and Kia vehicles, as well as other US automakers. The company also plans to extend its market reach to Latin America, including Mexico and Brazil, and Europe.
Legacy US automakers — namely, General Motors and Ford Motor Company – have traditionally located their manufacturing facilities in the Rust Belt, encompassing parts of the northeastern and midwestern US. However, global brands, including Hyundai Motor Group, have increasingly chosen southeastern states as their key location for new plants.
Hyundai Steel’s commitment to the US market is part of Hyundai Motor’s $21 billion investment in the US over the next four years, announced Monday by Hyundai Motor Group Executive Chair Chung Eui-sun alongside US President Donald Trump and other officials at the White House in Washington.
Industry insiders say that the steelmaker’s Louisiana base will be a strategic foothold for Hyundai Motor and other global car manufacturers to bolster their US operations. This is mainly due to Trump’s imposition of a 25 percent tariff on steel imports, which will boost domestic demand for US-made automotive steel.
“We can achieve stable profits in the US largely driven by robust steel demand, high prices and significant growth potential,” stated Hyundai Steel. “Additionally, lower energy costs such as natural gas and electricity compared to Korea, along with reduced logistics expenses, offer advantages in maintaining cost competitiveness.”
Leveraging its global brand recognition, the company stressed that it could also attract new customers for Korean-made products by creating synergies with its domestic production bases in Dangjin, South Chungcheong Province, and Suncheon, South Jeolla Province.
To secure stable funding for the investment while enhancing the competitiveness of its US steel business, Hyundai Steel is in talks with Hyundai Motor for joint investment. It is also considering equity investment with strategic partners.
With over 70 years of expertise in electric arc furnaces, Hyundai Steel produced approximately 1 million tons of automotive steel sheets from 2007 to 2010. In October 2022, the company achieved a significant milestone by successfully conducting the world’s first trial production of a 1.0 gigapascal-class carbon-reduced high-grade plate using an electric arc furnace.
Higher gigapascal values indicate greater hardness, which is becoming increasingly important in the eco-friendly vehicle market, as the integration of batteries and advanced equipment has led to the growing use of high-strength steel.
hyejin2@heraldcorp.com
