Hyundai Motor Group and Posco Group have surprised many by forming the Hyundai-Posco steel alliance to tackle the US market together. Both companies, known as fierce rivals in South Korea, now plan to cooperate overseas in response to strict US tariffs.
Hyundai announced the move on Monday, outlining plans to work closely with Posco on electric vehicle (EV) battery materials. Meanwhile, Posco aims to gain a stronger presence in North America by partnering with Hyundai’s new steel plant in the US.
Executives from both groups attended the signing event at Hyundai’s headquarters in Seoul. Hyundai’s Han Seok-won and Posco’s Lee Joo-tae led the talks.
Through the Hyundai-Posco steel alliance, Posco may invest in Hyundai Steel’s electric arc furnace plant in Louisiana. The $5.8 billion plant will produce 2.7 million metric tons of steel annually. Posco also wants to sell part of the plant’s output directly to automakers.
This new facility’s location gives it a huge advantage. It lies close to Hyundai’s Alabama plant, Kia’s Georgia plant, and Hyundai’s new Metaplant in Georgia.
Hyundai aims to sell over 3.26 million electric vehicles per year by 2030. To reach that goal, it must secure stable sources of battery materials. Posco subsidiaries like Posco International and Posco Future M already produce lithium and battery materials. They source these from international salt lakes and mines.
With the Hyundai-Posco steel alliance, both companies can reduce risks tied to unstable trade policies in the US and EU. Hyundai also hinted at a future R&D partnership on advanced battery materials, including all-solid-state batteries.
Experts say this partnership is historic. Professor Kim De-jong of Sejong University believes it reflects the urgency Korean firms feel under US trade pressure.
Posco has long considered building a full-scale steel mill in the US but halted previous plans due to labor costs. Now, working with Hyundai could revive that goal.
For Hyundai Steel, Posco’s investment brings vital financial support. The Louisiana project needs up to 2 trillion won, nearly all of Hyundai Steel’s reserves.
To raise more funds, Hyundai recently opened talks with Dongkuk Steel to sell its forging unit, Hyundai IFC.
