Hyundai Explores $7 Billion Steel Mill Investment in Louisiana to Support U.S. Operations

Hyundai Explores $7 Billion Steel Mill Investment in Louisiana to Support U.S. Operations

Hyundai Motor Group is exploring the possibility of building its first overseas steel mill in Louisiana, a strategic move designed to safeguard the company from potential protectionist policies in the United States under the incoming Biden administration. The automaker, which includes Hyundai Steel Co. and Kia Corp., is considering an investment of approximately 10 trillion won ($7 billion) in the facility, which would support its growing electric vehicle (EV) production lines in the U.S.

According to industry sources, Hyundai has been considering Texas, Georgia, and Louisiana for the location of its new steel mill, with Louisiana’s New Orleans emerging as the likely site. If plans proceed, Hyundai could break ground on the plant as early as 2026, with an estimated completion in 2029. The new steel mill would produce steel sheets to supply Hyundai’s assembly lines in Alabama and Kia’s plant in Georgia, as well as its electric vehicle-focused Metaplant in Georgia. Given the anticipated production capacity, the U.S. plant would churn out several million tons of steel sheets annually, contributing to Hyundai’s overall steel output of 18.69 million tons, including 5 million tons of automotive steel plates.

One of the driving factors behind the plant’s location in the U.S. is the potential to bypass high tariffs and reduce risks associated with trade policies that could impact Hyundai’s operations. U.S. protectionist measures, including a proposed 10-20% tariff on steel imports, could raise costs for South Korean steelmakers. The plant would also benefit Hyundai’s operations by lowering logistics costs and improving the efficiency of vehicle production. Hyundai Steel’s U.S. plant is expected to use direct reduction technology, which is a cleaner steelmaking method that emits less carbon dioxide compared to traditional blast furnace processes. This would likely make Hyundai more competitive in the U.S. market and may also help the company gain approval for its production in the country, aligning with the U.S.’s environmental goals.

The new steel mill also offers a significant opportunity for Hyundai to enhance its vertical integration, cutting reliance on imported steel and strengthening its position in the global automotive industry. Currently, Hyundai Steel ships 17% of its output to foreign automakers, with plans to increase this to 40%, as part of its goal to become one of the top three automotive steel manufacturers in the world. Hyundai’s expansion into steel production in the U.S. highlights the growing importance of local supply chains in the global automotive industry, especially in light of U.S. trade protectionism and rising demand for electric vehicles. With this move, Hyundai aims to secure its place in the future of automotive manufacturing while navigating complex geopolitical and economic challenges.