Hyundai Steel and POSCO break ground on first low-carbon U.S. steel plant amid tariff barriers

Hyundai Steel and POSCO have begun building an electric-furnace steel mill in Louisiana, turning local production into their answer to America’s growing barriers against imported steel.

The plant in Donaldsonville is designed to produce 2.7 million tonnes of automotive sheet steel a year. Hyundai and Kia will use the steel at their production bases in the southern United States and Mexico. Commercial operations are expected to begin around 2029.

Hyundai Steel plans to invest $5.8 billion in the facility, while POSCO is joining through an equity investment. The project began as part of Hyundai Motor Group’s plan to invest in the United States and strengthen local sourcing of vehicles, steel and auto parts. The group initially announced a $21 billion U.S. investment through 2028, then raised the figure to $26 billion.

The tariff environment has made American production more attractive. U.S. steel demand exceeds domestic output, but Washington has raised barriers through Section 232 tariffs and other trade measures. The United States abolished earlier steel exemptions in March last year and raised the Section 232 tariff rate to 50% in June.

Louisiana offers river and port access, abundant energy and electricity costs below the U.S. average. The plant will use natural gas and electric-furnace technology rather than the coal-based coke used in conventional blast furnaces. South Korea’s Industry Ministry estimates the process could reduce carbon emissions by about 70%. The ministry said future use of clean hydrogen could lower emissions further, although tariffs on imported equipment and materials remain a risk for the project’s initial investment costs.

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We will actively pursue the necessary support, including resolving trade and investment difficulties, so that our companies can gain an early foothold in overseas markets and build stable supply chains amid the rapidly changing global trade environment.