Cleveland-Cliffs and Posco sign partnership to mitigate steel import tariffs

Management from Posco and Cleveland-Cliffs, including Shin Sung-won, center left, head of corporate planning and finance at Posco, and Celso Goncalves, center right, Cleveland-Cliffs’ executive vice president and chief financial officer, pose for photos at the Posco Center in southern Seoul on Sept. 17. [CLEVELAND-CLIFFS]

 
Posco has signed a strategic partnership with Cleveland-Cliffs, the second-largest steelmaker in the United States, and is considering investing in the U.S. steelmaker. The move is seen as a way to mitigate trade risks, namely the 50 percent tariff on steel imports that U.S. President Donald Trump continues to endorse.
 
Cleveland-Cliffs announced on its website on Thursday that it had signed a memorandum of understanding (MOU) with Posco on Sept. 17 to establish a strategic partnership. Industry insiders believe it is highly likely that Posco will acquire a stake in Cleveland-Cliffs. Based on Thursday's closing price, Cleveland-Cliffs has a market capitalization of approximately $6 billion. If Posco were to acquire a 20 percent stake, the investment would be worth roughly 1.7 trillion won ($1.2 billion).
 

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"It is true that we are reviewing an equity investment, but the method and scale have not yet been decided," said a Posco official.
 
Cleveland-Cliffs is a vertically integrated steelmaker that handles everything from iron ore mining to steel scrap processing and post-production rolling, specializing in high value-added flat products for the automotive industry.
 
The company said the partnership will allow Posco to expand its existing customer base in the United States and stably supply products that meet U.S. origin requirements. According to Cleveland-Cliffs, the two companies aim to announce a binding agreement between the fourth quarter of this year and the first quarter of next year. All procedures are expected to be finalized in 2026.
 
"Our partnership with Posco represents a meeting of two industrial champions at a pivotal time for global manufacturing," said Celso Goncalves, Cleveland-Cliffs’ executive vice president and chief financial officer.
 
"We have long admired Posco from afar and look forward to partnering with them as we take the next major transformative step for Cleveland-Cliffs. 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."
 
The United States considers the steel industry a national strategic sector and imposes a 50 percent tariff on imported steel. Posco previously announced plans to invest in a steel mill in Louisiana with Hyundai Steel as part of a collaboration with Hyundai Motor Group. However, the mill is not expected to begin commercial production until 2029, meaning it would not help Posco immediately avoid tariffs.
 
The steel industry believes Posco could use an equity stake in Cleveland-Cliffs to secure locally produced steel for supply in the U.S. market. Cleveland-Cliffs is the largest U.S. steelmaker by blast furnace production. If Posco Holdings can secure output from Cleveland-Cliffs, it could distribute high-quality steel in the U.S. market without incurring the 50 percent import tariff.
 
"The MOU was signed as part of an overseas investment strategy to secure a foothold in high-profit markets through mutual cooperation in North America," said a Posco official. "The details will be finalized going forward."


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE SU-JEONG [yoon.soyeon@joongang.co.kr]