POSCO Holdings Inc., the parent of South Korea’s top steelmaker POSCO, has signed a strategic partnership with Cleveland-Cliffs Inc., the No. 2 US steel producer, as part of efforts to expand its presence in the US to blunt the impact of revived Trump-era tariffs on imported steel.
With the partnership, the Korean steel conglomerate is expected to invest more than 1 trillion won, or over $700 million, to acquire at least a 10% stake in the US steelmaker by next year, according to people familiar with the matter on Friday.
The move mirrors Nippon Steel Corp.’s acquisition of US Steel Corp. as POSCO seeks to turn the tariff regime into an opportunity to localize production inside the world’s most protected steel market, analysts said.
Cleveland-Cliffs said in a statement that it signed a memorandum of understanding with POSCO Holdings on Sept. 17, aimed at expanding cooperation in the US.
The two companies did not disclose details of the agreement, but the Ohio-based steelmaker said the tie-up would allow POSCO to “expand its customer base in the US while ensuring its products meet US trade and origin requirements.”
“We are aligned in our vision for a stronger, self-reliant and mutually beneficial industrial base across both nations. We look forward to welcoming POSCO to the Cleveland-Cliffs family and leveraging the combined resources and strengths of both companies,” Celso Goncalves, Cleveland-Cliffs executive vice president and chief financial officer, said in the press release.
FINAL DEAL BY EARLY 2026
Cleveland-Cliffs expects to sign a final agreement later this year or in early 2026.
Headquartered in Cleveland, Ohio, Cleveland-Cliffs is the second-largest crude steel producer in the US, with an annual output of about 17.3 million tons.
Its operations span from iron ore mining to automotive-grade steel, making it one of the few fully integrated steelmakers in North America.
Under the partnership, POSCO aims to secure a direct supply of “US-made steel” that can be sold to its existing US clients without triggering the US Section 232 tariffs of up to 50%.
The partnership will also help the Korean company meet US-origin rules critical for its automaking customers and infrastructure partners.
“We look forward to supplying our current customers with American-made steel through this partnership and maintaining the trusted relationships we have established in the US,” said POSCO Holdings Chief Executive Lee Ju-tae.
CHAIRMAN CHANG’S ‘TWO-TRACK APPROACH’
The move marks a major step in POSCO Group Chairman Chang In-hwa’s strategy to counter the Trump administration’s protectionist policies with a “two-track” approach – combining local production through a planned joint steel mill with Hyundai Steel Co. in Louisiana and strategic alliances with existing US producers.
Hyundai Steel’s $5.8 billion Donaldsonville, Louisiana, plant, focused on advanced automotive steel, is slated to begin operations in 2029.
By investing in Cleveland-Cliffs, POSCO would gain immediate access to US-made steel without waiting for the new Louisiana facilities to come online.
Industry officials said POSCO’s strategic partnership with Cleveland-Cliffs could also serve as a foundation for a broader “K-Steel Alliance,” aligning Korean and US supply chains in critical industrial sectors.
Cleveland-Cliffs produces high-grade automotive and electrical steel and heavy plate used in the energy and defense sectors – materials expected to be in strong demand under the “Make American Shipbuilding Great Again (MASGA)” project, a Korean initiative aimed at revitalizing the US shipbuilding industry.
ENOUGH CASH TO PURSUE STAKE PURCHASE
For POSCO, the partnership pairs its advanced steelmaking and green technology expertise with Cleveland-Cliffs’ vertically integrated production system – spanning from mining to final products – creating what industry officials call a “mine-to-market” value chain.
POSCO appears financially equipped to pursue a stake acquisition.
As of the end of June, the group held 6.6 trillion won in cash and cash equivalents and generated about 400 billion won through recent divestments of low-yield assets.
It plans to free an additional 1.2 trillion won by 2027 through ongoing portfolio restructuring.
“The Trump tariff regime has become the new normal,” said a Seoul-based steel industry analyst. “POSCO’s investment in Cleveland-Cliffs shows it is adapting faster than any Asian rival, using localization as its way to stay inside the US’ walls.”
