South Korea’s Hyundai Steel Company, a unit of Hyundai Motor Group, will build a 5.24-trillion-won ($5.52 billion) steel mill as it seeks to ensure stable steel supplies for the automaker.

The country’s No 2 steel maker after Posco said the mill would have a capacity of 7 million tonnes when it is completed in 2011. It also plans to invest an additional 2.26 trillion won to expand capacity to 12 million tonnes by 2015.
Hyundai Motor Group has been hoping to strengthen its steel business using traditional blast-furnace technology, as part of efforts to secure a more stable and cheap steel supply for its auto production.
Hyundai Steel plans to use its own cash to fund half of the 5.24 trillion won cost and to raise the other half externally, a company official said.
“With the expansion plan completed by 2015, Hyundai Steel is expected to have the capacity of producing 22.5 million tonnes of crude steel annually, becoming the world’s sixth-largest steel maker,” the company said in a statement.
A groundbreaking ceremony took place recently at the plant’s site in the port city of Dangjin, about 100 km southwest of Seoul.
Posco, the world’s fifth-largest steelmaker with crude steel output of 30.5 million tonnes annually, is currently the only South Korean company operating blast furnaces and dominates the domestic hot-rolled steel market.
Blast furnaces create high-end products from iron ore while electric furnaces manufacture lower-end steel by melting scrap.
Hyundai Steel produced 3.8 million tonnes of steel coil and 367,000 tonnes of hot-rolled steel products using electric furnaces in 2005. Total steel output last year was 8.2 million tonnes, against capacity of 10.5 million tonnes.