JFE Holdings Inc., Japan’s No. 2 steel mill, and Nucor Corp. of the U.S. will build a $270 million automotive steel plant in Mexico to tap demand in North America, the world’s second-biggest car market.
The 50:50 joint venture, called Nucor-JFE-Steel Mexico, will begin production in 2019, JFE Steel Corp., a unit of the Tokyo-based company, said Thursday in a statement. The plant’s capacity will be 400,000 metric tons a year, it said.
The deal fulfills JFE’s need for a manufacturing base in the region covered by the North American Free Trade Agreement, where Japanese automakers have been growing, while Nucor has been seeking to expand into supplying high-grade auto sheet, according to the statement.
Nucor is the top steel supplier in the U.S., according to the statement. JFE and its larger domestic peer, Nippon Steel & Sumitomo Metal Corp., are focusing on higher-end products such as automotive steel as a defense against a global glut of the metal emanating from China, maker of about half the world’s supply.
JFE Holdings Chief Executive Officer Eiji Hayashida said last month the company is open to overseas acquisitions and partnerships as it looks beyond the construction boom for the 2020 Tokyo Olympics and sees a declining population shrinking domestic demand for its products.