Hyundai Motor Group and Posco Group have strengthened their collaboration [1], signing a memorandum of understanding on Monday to deepen cooperation in steelmaking and secondary battery materials. The move comes as both South Korean conglomerates seek to navigate shifting trade dynamics in response to rising U.S. tariffs on steel and automobiles.
The agreement was formalized at Hyundai’s headquarters in Seoul, attended by Han Seok-won, executive vice president and head of strategy and planning at Hyundai Motor Group, and Lee Joo-tae, president and head of future strategy at Posco Holdings. At the heart of the partnership lies joint investment in Hyundai’s upcoming electric arc furnace steel mill in Louisiana. The $5.8 billion facility aims to produce 2.7 million tons of hot-rolled and cold-rolled steel annually, primarily serving the automotive manufacturing sector.
Posco will contribute significant investment, supporting Hyundai in securing about half of the external funding necessary for the project. The exact equity structure is still under negotiation. Hyundai Steel, the group’s steelmaking affiliate, will utilize the new facility’s output to supply Hyundai’s and Kia’s U.S. production plants, as well as other automotive manufacturers globally. Meanwhile, Posco is in talks to secure its share of the plant’s output for its own supply needs.
The investment provides Posco with a manufacturing foothold in the U.S. without requiring the construction of a full-scale steel mill. Currently, Posco operates processing centers in the U.S. and an automotive steel plant in Mexico but lacks primary production capacity in North America. Since assuming leadership last year, Posco Group Chairman and CEO Chang In-hwa has emphasized localized, end-to-end production as a strategic priority. The collaboration reportedly accelerated after discussions between Chang and Hyundai Motor Group Executive Chair Euisun Chung in late 2024.
Hyundai stressed that the agreement will secure essential raw materials in response to tightening trade regulations in the United States and European Union.
Sources:
[1] Steel rivals join hands: Posco invests in Hyundai steel mill in face of tariff risk https://koreajoongangdaily.joins.com/news/2025-04-21/business/industry/Steel-rivals-join-hands-Posco-invests-in-Hyundai-steel-mill-in-face-of-tariff-risk/2290038