[Exclusive] "No Signature on Final Contract"... POSCO Abandoned US Blue Ammonia Project Seized by Japan

POSCO Abandons U.S. Blue Ammonia Project Midway
Plan Withdrawn After Business Review... "Halted Due to Changing Circumstances"
Japan's JERA and Mitsui & Co. Confirm Joint Investment Worth 6 Trillion KRW
Localization Loses Momentum... Equity Investment in Hyundai Steel's Electric Arc Furnace Remains Uncertain

POSCO has reportedly abandoned its blue ammonia project in Donaldsonville, Louisiana, which it had been pursuing with CF Industries, the world's largest ammonia producer. Initially, POSCO planned to establish a global hydrogen and ammonia supply chain in the U.S. through this project, but it withdrew the plan, judging the business viability to be uncertain. This has raised concerns that the momentum behind Chairman Jang In-hwa's long-emphasized 'localization strategy in the U.S.' may be waning.

POSCO Building, Yeoksam-dong, Gangnam-gu, Seoul. Photo by Huh Younghan younghan@

According to business circles on the 15th, POSCO Group had been working with CF Industries to build blue ammonia production facilities in Donaldsonville, Louisiana, but did not sign a final contract. They had signed a Joint Development Agreement (JDA) in 2023 to produce blue ammonia for supply to the Asian market, but reportedly failed to reconcile differences during the Front-End Engineering Design (FEED) phase. A company official explained, "We pursued the agreement but recently halted cooperation due to changing circumstances."

Jang In-hwa, Chairman of POSCO Group

POSCO initially entered this project seeing opportunities such as tax benefits from carbon emission reductions. The Louisiana blue ammonia project was to use technology that produces hydrogen by injecting oxygen and utilizing the heat generated internally. Compared to conventional ammonia production methods, it could reduce carbon dioxide emissions by over 90%, and it was expected to receive subsidies under the U.S. Inflation Reduction Act (IRA).

In particular, the blue ammonia produced in the Louisiana project was planned to be used domestically as well. POSCO intended to transport the clean ammonia produced there to Korea, convert it into hydrogen, and use it for hydrogen reduction steelmaking and hydrogen co-firing power generation, with some also exported to Southeast Asian countries.

However, with the inauguration of the second Trump administration, the possibility of repealing the IRA arose, and the clean ammonia certification standards of the Asian countries targeted by POSCO differed, causing concerns about project feasibility. Consequently, it was concluded that the 'U.S. production → domestic consumption and overseas export' structure was disadvantageous in terms of investment profitability.

Japanese companies have filled the void left by POSCO. According to the Louisiana state government, CF Industries recently decided on a joint investment for the Louisiana project with Japan's largest power company JERA and general trading company Mitsui & Co. These companies plan to invest approximately $4 billion (about 5.686 trillion KRW) in a three-party joint venture to build facilities producing 1.4 million tons of blue ammonia annually. The shareholding ratio is CF Industries 40%, JERA 35%, and Mitsui & Co. 25%.

Unlike POSCO, Japanese companies have demand and energy infrastructure directly usable within the U.S. They also target Europe, rather than Southeast Asia, as their main market. Europe offers abundant tax benefits, such as direct subsidies and incentives for carbon cost reduction for carbon reduction technologies, whereas Southeast Asia still lacks related systems and certifications.

Since Chairman Jang's administration began, POSCO has actively considered local production plans in the U.S. Chairman Jang stated in this year's New Year's address, "We must achieve results through a complete localization strategy from materials to products in global growth markets such as North America," and emphasized again in the 57th anniversary speech last month, "We must pursue local complete investment and new businesses centered on future materials in high-profit regions such as the U.S."

Despite Chairman Jang's urging, POSCO's U.S. localization strategy has not gained momentum. Last year, it reviewed upstream and midstream investments in the U.S. but failed to present concrete business plans, including site selection. Meanwhile, competitors are rapidly expanding local production bases by establishing joint factories and securing raw materials in North America. In the steel sector, Hyundai Steel has already entered the U.S. market. Due to this background, there are criticisms inside and outside the industry that "POSCO's U.S. strategy has plans but lacks execution." An industry insider said, "While Chairman Jang quickly presented the strategy, motivation and speed on the ground seem relatively slow."

POSCO is reportedly considering investing in equity in an electric arc furnace steel plant that Hyundai Steel plans to build in Louisiana. This is the most concrete U.S. entry plan at present. However, whether this will lead to an actual financial investment remains uncertain. An industry source said, "POSCO has internally considered various options, including direct investment and joint ventures in the U.S. market. I understand that considering equity investment in Hyundai Steel's Louisiana steel plant construction project is part of this." A POSCO Group official also explained, "We are reviewing various strategic options regarding U.S. investment, but nothing has been finalized at this point."