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Hyundai Steel Dangjin Plant Overview |
[Alpha Biz= Paul Lee] Hyundai Steel has selected Donaldsonville, Louisiana, as the site for its new U.S. plant. To secure the $5.8 billion (approximately 8.5 trillion won) construction costs, Hyundai Steel is reportedly in discussions with multiple companies, including U.S. automakers and steel producers, to explore equity investment options.
According to industry sources on the 28th, the Hyundai Steel U.S. plant will be built in an industrial complex in Donaldsonville, Louisiana. After considering logistics efficiency, low electricity costs, and tax incentives, the site was chosen over Texas and other competing locations. Donaldsonville is a central hub for river transport via the Mississippi River, and across the river, there are factories belonging to Nucor, the largest steel company in the U.S. The location also allows maritime transportation through the Florida Straits to the Hyundai Motor plant in Savannah, Georgia.
Louisiana's status as a key center for the U.S. natural gas industry also played a role in the decision. The electric arc furnace (EAF) process, which Hyundai Steel plans to use, requires large amounts of natural gas. Unlike blast furnaces that melt iron ore, the direct reduced iron (DRI) method removes oxygen from iron in solid form, using natural gas to produce reduction gas in the process.
Louisiana is the largest natural gas reservoir in the southern U.S., with numerous liquefied natural gas (LNG) terminal plants that export natural gas in liquid form.
Additionally, the DRI electric arc furnace method reduces carbon dioxide emissions by more than half compared to the blast furnace process, allowing Hyundai Steel to avoid U.S. regulations that restrict the construction of new blast furnaces, which emit 2 tons of CO2 per ton of steel produced.
The quality issues associated with electric arc furnaces can also be addressed using the DRI method. While electric arc furnaces are typically unsuitable for high-end products due to impurities, the DRI process allows for the production of high-strength steel plates used in automobiles. Hyundai Steel is said to have already produced prototype products for testing by Hyundai Motor and European automakers.
Hyundai Steel is also working on securing the necessary investment. The Hyundai Motor Group plans to contribute about half of the 8.5 trillion won in equity investment from the group, Hyundai Steel, and other investors. The remainder of the funds is likely to be raised through external borrowing. Hyundai Steel has reportedly received equity investment proposals from over 10 companies.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
