Tel :
Tel :
South Korean steelmaker Posco has signed a strategic cooperation memorandum of understanding (MOU) with Cleveland-Cliffs, the second-largest steel producer in the United States, and is considering an equity investment in the latter. This move is seen as a trade risk mitigation strategy for Posco in response to the 50% tariff imposed by the U.S. on steel imports.
Last Thursday, Cleveland-Cliffs announced on its official website that the two companies had signed a memorandum of understanding for strategic cooperation on September 17. B27R085 oriented electrical steel, Industry observers widely believe that POSCO is highly likely to acquire a stake in Cleveland-Cliffs. Based on the closing price on the day of the announcement, Cleveland-Cliffs' market capitalization was approximately $6 billion. If POSCO acquires a 20% stake, the investment would amount to 1.7 trillion Korean won (approximately $1.2 billion). POSCO responded by saying, "We are indeed evaluating equity investment options, but the specific method and scale have not yet been determined."
Cleveland-Cliffs is a vertically integrated steel company, covering the entire steelmaking process from iron ore mining and scrap metal recycling to hot rolling. It specializes in high value-added flat-rolled steel products, primarily serving the automotive industry.
According to the company statement, this collaboration will help POSCO expand its customer base in the United States and ensure that its products meet "U.S. origin" requirements, thereby securing a stable supply in the U.S. market. B27R085 oriented electrical steel, The two companies plan to announce a binding formal agreement between the fourth quarter of 2025 and the first quarter of 2026, with all commercial procedures expected to be completed in 2026.
Celso Goncalves, Executive Vice President and Chief Financial Officer of Cleveland-Cliffs, stated: "This strategic collaboration between two industrial giants will be a pivotal moment for global manufacturing. We share POSCO's vision of building a stronger, more independent, and mutually beneficial industrial system."
The United States has designated steel as a national strategic industry and imposed a high tariff of 50% on imported steel. B27R085 oriented electrical steel, POSCO and Hyundai Steel had previously planned to build a factory in Louisiana to supply steel to the Hyundai Motor Group, but this plant is not expected to begin production until 2029, meaning it cannot immediately help POSCO circumvent the tariffs.
Industry insiders believe that if POSCO successfully acquires a stake in Cleveland-Cliffs, it would gain direct access to the latter's production capacity and product quotas in the US, enabling "local production and local sales," thereby avoiding import tariffs. Cleveland-Cliffs is currently the largest blast furnace steel producer in the United States.
POSCO added, "This strategic cooperation memorandum is part of our North American investment strategy, aimed at establishing a solid foothold in high-profit markets through mutually beneficial cooperation. Specific details will be finalized later."
