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POSCO International is setting up its new facility for the manufacturing of parts for electric vehicles in Coahuila, Mexico. It finally held the groundbreaking ceremony to begin construction late last week.
POSCO is building this new EV parts plant to meet the increasing demand for automotive motor cores. These components are key materials for generating electricity in electric cars. As per The Korea Times, the event was attended by POSCO Mobility Solutions chief executive officer, Kim Hak Yong, Korean Ambassador to Mexico Suh Jung In, and Governor of Coahuila, Miguel Riquelme.
The new POSCO plant is now being built in Coahuila's city of Ramos Arizpe. This location is also said to be the center of the automotive business sector in northeastern Mexico; thus, major automakers and auto parts producers also have facilities here.
It was revealed that the South Korean company also has plans to invest around KRW160 billion or $123 million in its new Mexican production factory by 2030. The plant is expected to yield a production capacity of 1.5 million EV parts per year, worth around $460 million. These will be supplied to a still unidentified carmaker.
The company already secured this multi-million worth of contract with an unnamed major automaker even before the construction of the Mexican plant started. POSCO will also be in charge of manufacturing the electrical steel sheets needed for this project and will be supplying them until 2030.
"With the Mexican plant as a bridge, we will strengthen our penetration into the North American EV parts market and establish ourselves as a key partner when it comes to motor cores in the global eco-friendly car industry," POSCO's chief executive officer, Joo Sibo said in a statement.
POSCO was said to have chosen to build its plant in Mexico because of the U.S. import restrictions on electric steel sheets, logistics competitiveness, and key material for motor cores. The region also has a vast automotive industry, and the company is targeting North America.
The Korea Economic Daily reported that having its facility in Mexico marks the start of its push to enter the US market. It will start by building its presence in this location first and then broaden its business in the United States.
