Hyundai Steel Company announced March 24 that it would build a new $5.8 billion electric arc furnace steel mill in Louisiana to supply steel for Hyundai Motor Group. The latest announcement follows a previous Hyundai announcement it would invest a total of $21 billion in the United States on unspecified projects.

Hyundai Group has been producing steel in South Korea for more than 70 years, but the U.S. project would be its first overseas investment in steelmaking. 

Production of steel plates would begin by 2029, according to Hyundai Steel Co.

The new mill will have a capacity of 2.7 million metric tons and employ 1,300 people. In a statement, Hyundai Steel President Seo Gang-Hyun said the new plant would create jobs and supply automakers other than Hyundai in the future.

“We plan to supply automotive steel plates not only for Hyundai Motor and Kia’s strategic models but also to expand sales to U.S. automakers in the future,” Gang-Hyun said.

At its heart, the new mill will use an electric arc furnace to produce hot- and cold-rolled steel plates. Unusual for the U.S., Hyundai is planning an integrated electric-furnace steelmaking operation, fueled with direct reduced iron from a co-located DRI plant rather than blast furnace ironmaking. It’s a production program that uses the best available technologies to minimize the carbon emissions that are inherent to steelmaking.

Direct reduction uses carbonized gasses to reduce iron ore to usable material without melting it.

According to the company, the Louisiana location will place the new mill near Hyundai and Kia’s Alabama and Georgia auto factories, but the location is also advantageous for the availability of Louisiana natural gas, which is necessary for the DRI processes.

DRI is also a transportable product, and may be produced for commercial purposes in addition to supporting Hyundai’s steelmaking requirements.

In a statement, Louisiana Governor Jeff Landry credited state tax reforms and Louisiana’s “business-friendly approach” for Hyundai’s decision to build the plant in Donaldsville, between Baton Rouge and New Orleans.

“Hyundai’s decision to invest nearly $6 billion in Ascension Parish speaks volumes about Louisiana’s skilled workforce, robust infrastructure and our ability to compete for innovative manufacturing facilities,” he said.

The location is also an opportune spot for exports of steel slabs. In its statement, Hyundai Steel said the facility will also “target markets in Latin America and Europe.”