ArcelorMittal, the world’s largest steel producer, said on Wednesday it has agreed to make concessions to Steel Authority of India to seal a delayed $897 million automotive joint venture. The two companies are close to ironing out key commercial terms to close the deal, including non-compete and exit clauses as well as finalising policy on arbitration, three sources with direct knowledge of the negotiations told Reuters.
“In the interest of the strategic partnership, some concession from ArcelorMittal on technology has been extended,” a company spokeswoman told Reuters, without giving further details.
The deal would help SAIL, which has been in the red for at least seven straight quarters, compete with local rivals such as JSW Steel and Tata Steel who have foreign partnerships to make steel for the car industry.
SAIL did not respond to a Reuters email seeking comment.
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The proposed joint venture is also crucial for ArcelorMittal as India is the only big steel market where demand is rising fast and government policy is increasingly favouring locally made products.
The company, controlled by billionaire Lakshmi Mittal, has unsuccessfully tried to gain a foothold in India for almost a decade.
India is now drafting a land-for-assets policy among a raft of measures aimed at attracting foreign investment into the world’s third largest steel producing market.
ArcelorMittal may follow up the joint venture with a larger presence through the purchase of a stake in three of SAIL’s weak units, a banker and three sources involved in talks said.
SAIL’s loss-making units, which the government plans to sell under its divestment plan in the coming months, are at Durgapur, in the eastern state of West Bengal, Bhadravati in southern state of Karnataka and Salem in Tamil Nadu.
India’s Steel Minister Chaudhary Birender Singh said on Monday the talks between ArcelorMittal and SAIL for the joint venture were in the “final stages”, after a preliminary understanding signed in May 2015 lapsed on Sunday.
Government officials said the timeline for the venture would get an official extension but no date has been specified.
Talks between the two companies had hit a roadblock over disagreement on revenue-sharing as well on technology transfer fees.