The nation’s top two steel manufacturers, POSCO and Hyundai Steel, have announced plans to jointly invest in the construction of a new steel mill in the U.S.

Hyundai Motor Group and POSCO Holdings held a ceremony in Seoul on Monday and signed a memorandum of understanding on comprehensive cooperation in the fields of steel and secondary battery materials. 

Under the accord, POSCO will gain equity in a steel mill that Hyundai Steel, an affiliate of Hyundai Motor Group, plans to establish in Louisiana with the goal of starting production in 2029. 

POSCO will cover some of Hyundai Motor Group’s investment costs, which total five-point-eight billion U.S. dollars, and will directly sell some of the resulting products.

With the accord, Hyundai will be able to save on investment costs and thus stably supply automotive steel sheets to its three factories in the U.S., while POSCO is securing a bridgehead to advance into North America’s steel market.