Hyundai Motor Group and POSCO Group have agreed to jointly build a steel mill in the United States. Hyundai Steel, South Korea’s second-largest steelmaker and an affiliate of Hyundai Motor, had earlier announced plans to invest $5.8 billion (8.23 trillion won) to construct a mill in Louisiana. In a rare move, POSCO, the country’s largest steelmaker, has decided to participate in the project.
The two groups have had a long and often tense relationship as business partners in the automotive steel supply chain, frequently clashing over prices and terms. With the founding of Hyundai Steel, they also became fierce competitors as the top two steelmakers in South Korea. However, amid the increasingly protectionist trade policies of U.S. President Donald Trump’s administration, including steep tariffs, the two rivals have chosen cooperation over competition.
Both groups held a signing ceremony at Hyundai’s headquarters in Seoul on April 21 for a memorandum of understanding on mutual cooperation in the steel and battery materials sectors. The agreement includes joint investment in the U.S. steel plant and collaboration in core materials for electric vehicle batteries.
Specifics such as investment amounts, ownership stakes, and conditions were not disclosed. The companies said discussions on investment terms are ongoing. Hyundai previously announced it would fund the 8 trillion won ($5.6 billion) project with a 50:50 split between equity and loans from financial institutions. About half of the equity—around 2 trillion won—is to be provided by Hyundai affiliates, with the remainder raised through external investment. POSCO is now joining the project as a key partner.
This partnership allows Hyundai to secure funding while spreading risk. Although Hyundai last month pledged a massive 31 trillion won investment during a joint announcement with Trump at the White House, the steel mill alone carries a heavy financial burden and uncertain returns. Industry watchers have voiced concerns that low utilization rates or shifts in market conditions could hinder profitability, despite plans to use the steel for Hyundai’s U.S. manufacturing.
For POSCO, the deal secures a strategic foothold in North America. Chairman Chang In-hwa, who took office last year, has repeatedly expressed his ambition to build a local steel production base in the U.S., but had made little headway until now. By acquiring a stake in Hyundai Steel’s U.S. project, POSCO moves closer to realizing this goal. With 6.77 trillion won in cash reserves as of the end of last year, POSCO Holdings is financially well-equipped. The companies added that they are discussing further options, such as POSCO taking part of the plant’s output for its own sales.
For many years, POSCO (formerly Pohang Iron and Steel), the sole steel producer in South Korea, was a key supplier for Hyundai, which relied heavily on steel for automotive production. Seeking to break free from this dependency, Hyundai founder Chung Ju-yung made a strong push in the 1970s to establish a “second steel mill.” However, POSCO’s strong opposition thwarted this attempt, and the site ultimately became what is now the Gwangyang Steelworks. Even after that, whenever Hyundai tried to gain steel independence, POSCO continued to block their efforts, refusing to supply steel and even challenging patents. The rivalry has now taken a dramatic turn toward cooperation.
