Hyundai Steel (004020) broke ground on its first production base in the United States, the Hyundai Steel-POSCO Louisiana Steel (HPLS) electric arc furnace mill. HPLS is the world's first fully integrated electric arc furnace steel mill specialized in automotive steel sheets, and is expected to play a central role in completing Hyundai Motor Group's mobility supply chain in the U.S.
Hyundai Steel said it held the groundbreaking ceremony for HPLS in Donaldsonville, Louisiana, on the 4th, for the production of low-carbon premium flat-rolled steel products. In his welcoming remarks, Hyundai Motor (005380) Group Executive Chairman Euisun Chung said the steel produced at the site would play a major role in the production of next-generation mobility products by Hyundai Motor Group as well as U.S. automakers. He added that it would also contribute to building the foundation of core industries ranging from artificial intelligence data centers to power generation, and to creating safer workplaces.
Senior Hyundai Motor Group executives attended the ceremony, including Chung, Hyundai Steel President and CEO Lee Bo-ryong, Hyundai Motor President and CEO Jose Muñoz, Kia (000270) President and CEO Song Ho-sung, Hyundai Motor President Sung Kim and Hyundai Motor President Seo Kang-hyun. POSCO, a joint investor in HPLS, was represented by Chairman Chang In-hwa.
Trade, Industry and Energy Minister Kim Jung-kwan, Ambassador to the U.S. Kang Kyung-wha and Consul General in Houston Lee Kyung-eun also visited the site. On the U.S. side, attendees included Louisiana Governor Jeff Landry, Deputy Commerce Secretary William Kimmitt, Democratic Rep. Troy Carter and Republican Rep. Julia Letlow.
In a congratulatory address, Landry said Hyundai Steel chose Louisiana as the site of its first steel mill in North America because the state offers a skilled workforce, infrastructure and a strong business environment. He said the investment would create quality jobs and open new opportunities for Louisiana companies.
HPLS, which will receive a total investment of $5.8 billion (about 8 trillion won), is a strategic base for Hyundai Steel's global expansion and a forward base for its shift to low-carbon production. Hyundai Steel holds a 50% stake, with Hyundai Motor and Kia holding 15% each and POSCO 20%. The mill will have an integrated process capable of handling everything from raw materials to finished products, allowing it to produce high-value strategic products while cutting carbon emissions compared with blast furnaces. Construction will begin in the fourth quarter of this year, with mass production of about 2.7 million tons of annual capacity slated to start in 2029.
Chung has moved quickly on follow-up work since announcing U.S. investment plans including the HPLS project at the White House in March last year. The HPLS corporate entity was formally launched in January, and equipment and energy contracts have been completed with global companies including Italy's Danieli (steel equipment), Germany's SMS (main equipment), U.S. utility Entergy (power) and France's Fives (cold rolling equipment). The project is also expected to generate synergy with the RPCC Training Center now under construction to train local workers.
Donaldsonville, where HPLS is located, is considered a land logistics hub with major railroad lines nearby. Situated in the Mississippi River basin, it can also berth Panamax-class vessels of about 70,000 tons, giving it optimal access for transporting raw materials and products. Energy costs for natural gas and electricity are far lower than in South Korea, securing cost competitiveness. Above all, the site offers strong access to major automaker plants, including Hyundai Motor's factory in Alabama, Kia's in Georgia, GM's in Texas, Volkswagen's in Tennessee and Honda's in Alabama, enabling a stable supply system.
HPLS is expected to play a key role in easing a chronic shortage of high-value steel products by joining the automotive supply chains of Hyundai Motor and Kia as well as the broader U.S. auto industry. According to the World Steel Association, the U.S. ranked third in the world in crude steel output last year at 82 million tons, but production has not kept pace with demand, leaving the country importing more than 20 million tons a year. High-value flat-rolled products such as hot-rolled and cold-rolled coated steel sheets account for more than 10 million tons of imports annually, or more than 50% of total steel imports.
Steel prices in the U.S. are also the highest in the world, more than 30% above levels in Asia and Europe. Demand is expected to grow further. The U.S. is the world's second-largest auto producing country after China, with output of 10.24 million vehicles last year. Production is expected to expand further as the U.S. government strengthens policies prioritizing domestic manufacturing. Hyundai Steel said it would secure sustainable profitability at HPLS through solid demand and high prices while expanding supply of high-quality automotive steel sheets.
The project is also expected to help resolve risks from steep U.S. tariffs. In May, the U.S. government raised tariffs on foreign steel products to 50% from 25%. An official at Hyundai Steel said HPLS would be a clever solution that minimizes trade risks from trade barriers while allowing the company to expand global sales volumes.
Hyundai Steel plans to equip HPLS with an electric arc furnace production system and push ahead with a shift to low-carbon production. Producing steel at the HPLS electric arc furnace can cut carbon emissions by 70% compared with conventional blast furnaces. Hyundai Steel also plans to replace the natural gas used in the HPLS direct reduction plant with hydrogen. Once the HPLS production system stabilizes, the company will quickly expand the approach to South Korea, fully converting coal-based steelmaking processes to hydrogen-based processes by 2050.
Hyundai Steel is also using HPLS to accelerate global brand value and sales growth. The strategy is to leverage the recognition gained from serving local U.S. customers to target advanced markets such as Europe. Hyundai Steel said it would also be able to win new overseas customers for products made in South Korea, with synergy expected with domestic production bases including the Dangjin steelworks and the Suncheon plant.
