The proposed Rs 5,000-crore joint venture between ArcelorMittal and SAIL, agreed on by the firms more than a year ago for producing automotive steel in India, is yet to make any headway with both the parties still stuck at the “negotiation” stage, a senior steel ministry official said.
“The negotiation is still on. It does take a lot of time to complete the negotiation process,” the official said.
Another source said the matter was listed for discussion at the meeting of the inter-ministerial group (IMG) on Tuesday, but since the parties involved could not reach a conclusion on the pattern of shareholding and other issues, there would be a separate meeting on the proposed joint venture next week.
The world’s largest steelmaker ArcelorMittal and India’s largest steel PSU SAIL had on May 22 last year signed a memorandum of understanding (MoU) to set up an automotive steel manufacturing facility. The aim was to cater to the growing need of the automotive sector.
SAIL was supposed to supply steel to the joint venture entity while ArcelorMittal, the required technology.
ArcelorMittal supplies 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.
Although the companies haven’t announced the size of the plant or the location of the proposed JV entity so far, sources had earlier said it could be a 1.2-million-tonne unit, entailing an investment of around R5,000 crore.
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.
The combination of significant demand growth and limitations in India’s existing domestic automotive steel production capabilities provides ample opportunity for both ArcelorMittal and SAIL.
A senior SAIL official said the feasibility study report for the proposed JV is yet to be finalised.