SEOUL -- South Korea's Posco said Friday it will form a joint venture to manufacture automotive steel in China with HBIS Group, the country's second-biggest steel producer.
Each side will invest $300 million into the 50-50 venture, constructing a plant that makes galvanized steel sheets to supply China's growing auto industry.
"We will establish our competitive advantage in the world's largest automotive steel market through the joint venture," Posco Chairman Choi Jeong-woo said.
Construction of the plant in Tangshan, a city near Beijing, will begin in January, with completion due at the end of 2023. The facility will produce 900,000 tons of galvanized steel sheets a year.
A Posco plant in China's Guangdong Province produces 450,000 tons of automotive steel sheets yearly. This factory will be absorbed by the joint venture, the company said.
Global automakers are building and expanding assembly plants in China. Posco, South Korea's leading steelmaker, has joined forces with a bitter rival to boost the local capacity. The company operates similar manufacturing joint ventures in Indonesia, Vietnam and elsewhere.
HBIS is the world's third-largest crude steel producer, churning out 43.76 million tons last year, World Steel Association data shows. Posco ranks sixth at 40.58 million tons.