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Hyundai Sees Bright Future in Auto Steel

Hyundai Sees Bright Future in Auto Steel

DANGJIN, South Korea – Some automakers are investing heavily in alternative materials as part of their future strategy, but South Korea's Hyundai is banking on advanced high-strength steel alloys for the long term.

While BMW invests in carbon-fiber supplier SGL and Jaguar Land Rover is developing more aluminum-intensive platforms, Hyundai is spending billions to make Hyundai Steel here on Korea’s west coast the most advanced steel production facility in the world.

Hyundai is the only global automaker that has its own captive integrated steel works, and it recently spent $5.5 billion building the first covered production system.

Steel plants historically are notoriously dirty operations, where huge piles of iron ore and other raw materials are transported miles on giant open conveyor belts from freighters to blast furnaces, throwing off dust every inch of the way.

But in what looks like a set from a science-fiction movie, all these operations are encapsulated in soaring domes and enormous tunnels here in Dangjin, sealing in dust from the time iron ore is scooped from a ship’s hold to the time it hits the blast furnace.

The facility includes 21 miles (35 km) of fully enclosed conveyor belts and state-of-the-art storage domes, says Senior Executive Vice President Cho Won-Suk.

Enclosing storage and transport routes for raw materials not only prevents airborne dust particles from contaminating surrounding areas, it annually saves about $20 million worth of  raw materials that otherwise would have blown away or been contaminated by exposure to the elements, Cho says.

Ford had Rouge Steel, its own integrated steelmaker, for decades, but it struggled and ultimately was sold off because it was too dependent on Ford’s cyclical automotive production.

Only about 50% of Hyundai Steel’s output goes to Hyundai vehicles, Cho says. The other half is sold to a wide range of markets, including construction, shipbuilding and tubular goods for the energy sector that offset the ups and downs of car and truck sales.

But Hyundai officials say the most important part of the relationship is the ability of the automaker and steelmaker to jointly develop proprietary ultra-high-strength steel grades that can give Hyundai vehicles an edge.

“We are focusing on advanced high-strength steel,” Cho says. These new grades of ultra-strong advanced steel alloys are expected to give new vehicles such as the ’15 Genesis luxury car an advantage in crashworthiness, weight and cost.

The Genesis also reportedly will have a lightweight steel hood instead of a more expensive and more easily damaged aluminum hood, thanks to these new alloys.

Cho acknowledges alternative materials will make incursions into steel’s territory going forward, especially in high-priced performance and luxury vehicles where automakers are willing to pay a premium. But he points out steel has comprised 60% of vehicle weight with little change during the entire history of the modern automobile despite many forecasts predicting its demise.

Cho also says steel is the greenest automotive material because it is easy to recycle and takes much less energy to make than smelting primary aluminum or fabricating parts from carbon fiber.

However, alternative materials are challenging this last argument. BMW limits the carbon footprint of the production of i3 and i8 carbon-fiber bodies by using hydroelectric power at its U.S. factory in Moses Lake, WA. The aluminum industry also is dramatically reducing CO2 emissions from automotive aluminum production with new recycling methods.

Most automakers are not championing a specific material, touting instead a “materials agnostic” strategy as they strive to develop lighter, more efficient vehicles.

But as the industry heads toward the 54.5 mpg (4.3 L/100 km) goal in the U.S., and similar rules in Europe and Asia, some automakers are racing to secure claims on specific technologies. BMW wants to ensure there is sufficient carbon-fiber capacity for its future ambitions. Jaguar Land Rover wants to exploit its growing expertise in aluminum.

Hyundai clearly intends to make the most of its huge investment in steelmaking.

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