Hyundai Motor Company to Enter Furnace Business

Hyundai Motor Company to Enter Furnace Business—

During his visit to the Dangjin iron mill, Hyundai Chairman Jeong announced he will enter the furnace business and grow the company into the eighth largest steel maker in the world. The Dangjin iron mill’s former owner, Hanbo Iron and Steel, brought in the Corex system for producing liquid iron, but construction had been suspended following Hanbo’s bankruptcy in 1997. Now, Hyundai has decided to abolish the system and replace it with smelting furnaces, which the company considers more profitable. “Parts such as camshaft that are now used to make automobiles are made from imported steel from Japan. Unless we make quality steel products of our own, it will be impossible to manufacture world-class vehicles,” said Chairman Jeong. Concerned people estimate that building one smelting furnace will cost the company more than two trillion won and a large facility site equal to that of Dangjin mill.

Hyundai’s Long Wished Dream to Come True—

Hyundai Motor Company has long tried to build an iron mill in Ilkwan but has not succeeded. Early last year, Hyundai and POSCO—one of the largest Korean steel companies—had gone to court. Hyundai Hysco, the cold steel plate vendor of Hyundai Motor, had been in trouble because POSCO, the sole supplier of hot steel plate which is used for making cold steel plates, had stopped selling to Hysco.

When the Dangjin iron mill restarts next year and the new smelting furnace is completed, Hyundai Motor Company will be able to self-deliver resources for hot steel plates. As the group is stepping up its efforts to build Ilkwan iron mill, the Korean steel industry is expected to make a transition from POSCO’s monopoly to a competition system.

Ki-Jeong Ko Do-Young Kim koh@donga.com nirvana1@donga.com