Pvt ArcelorMittal, national SAIL to form steel plant JV
NRI billionaire Lakshmi Mittal-led ArcelorMittal on Friday partnered PSU giant SAIL to set up an automotive steel plant with an estimated Rs 5,000 crore investment, taking a fresh shot at entering India after nearly a decade-long wait for its earlier projects to take off. The details of the investment and plant size were not disclosed. However, a source said the plant size discussed is “1.5 million tonne (MT) and the investment could be in the range of $850 million”.
“The proposed JV will construct a state-of-the-art cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to India’s rapidly growing automotive sector,” ArcelorMittal and SAIL said in a joint statement. “We can’t put a definitive timetable on this project.
However, as a broad guide...it could take up to two years to carry out all necessary due diligence and cement our relationship into a formal joint venture company,” a Steel Authority of India spokesperson said.
The project needs formalising the JV structure, assessing the various options regarding potential plant locations, costing the project and so on. The MoU towards setting up the JV was signed by Lakshmi Mittal, Chairman and CEO of ArcelorMittal, and SAIL’s Chairman CS Verma.
The move is being viewed as a big step for ArecelorMittal which has been trying to make inroads into India after failed attempts to set up plants at Odisha and Jharkhand. Its work on $6.5 billion <g data-gr-id="42">Karantaka</g> plant is yet to take off. The JV proposal comes at a time when South Korean steel giant POSCO is also in talks with SAIL to set up an integrated steel plant. Steel Secretary Rakesh Singh said: “Increasing the availability of indigenously produced automotive steel would reduce India’s reliance on imports and provide the Indian steel industry and the automotive industry with a sustainable competitive advantage.”
He added that India is expected to grow as a hub for automobile export manufacturing facilities to cater to the international market. “This proposed collaboration between ArcelorMittal and SAIL is a positive and welcome step towards fulfilling the objectives of the ‘Make in India’ campaign launched by Prime Minister, Narendra Modi.”
Mittal said the company was in discussions with SAIL for some time and the <g data-gr-id="38">pact</g> indicated its intention to further advance the collaboration. “Bringing together our leading automotive technological capabilities with SAIL’s production scale in India, in a similar manner to ArcelorMittal’s partnership with Hunan Valin on our VAMA joint venture in China, is an exciting and powerful combination,” he said.
He added: “The automotive sector is a highly strategic and important market for ArcelorMittal; establishing an automotive <g data-gr-id="46">focussed</g> production presence in India, one of the world’s fastest growing automotive markets, is a natural progression in executing our global automotive strategy.” Verma said SAIL is on the verge of completing a comprehensive modernisation and expansion programme to increase its hot metal capacity from 14 million tonne per annum (MTPA) to 23.5 MTPA, with a quantum jump in production of <g data-gr-id="47">value added</g> steels.
“Furthermore, we have drawn up a Vision 2025 plan to further increase capacity to 50 MTPA. Product enrichment is an integral part of this plan and the MoU with ArcelorMittal will pave <g data-gr-id="31">way</g> for a new chapter in indigenous production of high- quality automotive steel in India,” he said.