Keen on making greenfield investments in India’s steel sector, global major ArcelorMittal is all set to finalise a 50:50 joint venture agreement with the state-run Steel Authority of India (SAIL) on October 20 for setting up a R5,000-crore facility at Rourkela to produce high-end products for the country’s growing automotive sector.
The world’s largest steelmaker and India’s largest steel PSU had on May 22 last year signed a memorandum of understanding (MoU) for setting up the facility at Rourkela in Odisha. Although the companies have not announced the size of the plant, sources had earlier said it could be a 1.2-million-tonne unit.
A highly-placed official in the steel ministry told FE that representatives from both the companies would meet on Thursday in the presence of steel secretary Aruna Sharma and other senior ministry officials to finalise the joint venture agreement and the detailed project report (DPR). Mittal is unlikely to be present in the meeting. The signing on the dotted lines could happen soon after.
The JV company would construct a state-of-the-art cold rolling mill and other downstream finishing facilities that will offer technologically advanced steel products to India’s rapidly growing automotive sector. Steel minister Chaudhary Birender Singh said that the joint venture would be operational by December.
SAIL is supposed to supply steel to the joint venture entity while the ArcelorMittal will provide the required technology. ArcelorMittal caters to around 17% of the global auto steel demand.
India is likely to manufacture 7 million units to become the world’s fourth largest automobile manufacturing nation by 2020. Increasing the availability of indigenously produced automotive steel would reduce India’s dependence on imports and is likely to give the automotive industry a sustainable competitive advantage.
Kolkata-boy Mittal, who started his career working in his family’s steel-making business in India more than 35 years ago, has been long nurturing hope of making greenfield investment in India.
Though his company has picked up 29% stake in Uttam Galva Steels, a manufacturer of cold rolled steel and galvanized steel, greenfield projects in India remained elusive for him so far.
Mittal had to scrap a $12 billion steel project in Odisha facing inordinate delays in acquiring land and securing iron ore linkages.
ArcelorMittal has also reportedly sought for change in the use of land granted for a 6 MTPA steel plant in Karnataka. Also no tangible progress has been made in the proposed $6.5 billion steel project in Jharkhand.