Hyundai Motor Group unveiled plans Monday for a $6 billion steel plant in Louisiana to provide the metal needed for its auto factories in Alabama and Georgia. The announcement came as part of a broader $21 billion investment into U.S. manufacturing facilities including EV factories.
Unlike much of the Midwestern, coal-based steel production that supplies the domestic automotive industry, the Hyundai Steel plant in Ascension Parish, roughly an hour west of New Orleans in the heart of the Bayou State’s so-called Cancer Alley, proposes to use an electric arc furnace. This technology is increasingly popular in the U.S. and around the world, and if powered by clean electricity it can produce steel without emitting nearly any CO2.
But electric arc furnaces can’t refine raw iron to produce “primary steel” — they rely instead on recycled scrap metal. Rather than using coal to turn iron ore into the precursor for making steel, Hyundai’s newly announced plant will likely use natural gas in the direct reduced iron (DRI) process, industry analysts say.
“Is this a step toward sustainable, green steel? Maybe not so much,” said Matthew Groch, senior director of decarbonization at the environmental group Mighty Earth. “But is it a step away from blast furnaces? Yes, which is the beginning part of transitioning the primary steel industry to low-carbon production.”
At peak capacity, Hyundai said the plant will produce 2.7 million tons of steel each year, including “low-carbon steel sheets using the abundant supply of steel scrap in the U.S.” The factory, on which construction is expected to begin later next year, will create upward of 1,300 jobs.
Hyundai made no mention of the DRI process in its press release, and a spokesperson declined to comment beyond what was in the official statement. But experts tracking the project have long expected the plant to use DRI, and an article in a Korean newspaper noted that it includes DRI. The 3.6 million tons of iron ore the Louisiana government said the plant would import each year will also need to be processed somehow, since the announced electric arc furnace won’t do the trick.
DRI with natural gas can cut carbon emissions in half compared to a coal blast furnace. Though the technology is catching on worldwide, it’s still eclipsed by traditional blast furnaces: DRI facilities accounted for about 36% of iron-making capacity under development, per a Global Energy Monitor report released last summer, but just 9% of operational capacity.
To truly produce low-carbon steel, however, the Hyundai facility would need to fuel its DRI process with green hydrogen — the version of the fuel made with completely carbon-free electricity — instead of gas, said Hilary Lewis, the steel director at climate advocacy nonprofit Industrious Labs.
As long as the Trump administration retains the 45V tax credits created by the Inflation Reduction Act, the price difference between DRI using gas and green hydrogen would be manageable. Gas-powered DRI yields steel at a levelized price of about $800 per ton, according to calculations by clean energy think tank RMI. Green hydrogen would raise the price to about $964 per ton.
Since the typical passenger car uses about one ton of steel, switching to green hydrogen instead of gas would raise the cost of manufacturing a car by less than one month of an average auto insurance payment.
