JSW Steel plans to invest $500 million in Texas unit

By: |
Mumbai | Published: March 27, 2018 5:52:16 AM

JSW Steel acquired the facility in Baytown in late 2007 but with the global financial crisis that hit in 2008 and the downturn in the oil and gas sector, the expansion and modernisation process of the company was held back by JSW.

JSW steel, JSW steel US, Texas JSWJSW Steel (US), a subsidiary of JSW Steel, has agreed to consider investment of up to 0 million in phases in developing its steel manufacturing facility at Baytown in Texas, US. (Reuters)

JSW Steel (US), a subsidiary of JSW Steel, has agreed to consider investment of up to $500 million in phases in developing its steel manufacturing facility at Baytown in Texas, US. On Monday, JSW Steel announced signing a memorandum of cooperation between its US subsidiary and the office of governor, Texas, for the same. As part of the memorandum, governor Greg Abbott has also approved $3.4-million grant from the Texas Enterprise Fund to the company. The intended investment by JSW USA will be used to undertake capability enhancement of its plate & pipe mill unit located in Baytown, Texas. Speaking to reporters at a press conference, Parth Jindal, director, JSW USA said, “JSW Steel (USA) wish to create a fully integrated steel complex that will bring precision manufacturing of high-quality steel plate and pipe to Texas, USA.”

JSW Steel acquired the facility in Baytown in late 2007 but with the global financial crisis that hit in 2008 and the downturn in the oil and gas sector, the expansion and modernisation process of the company was held back by JSW. However, now with the tide turning for the sector, Jindal said, the investment plans have been revived. Jindal added the unit will service the requirements of oil and gas sector in Texas, rest of US as well as the neighbouring countries. It will primarily cater to the oil and gas sector, and will also add customers in sectors like defence, ship building and other infrastructure industries.

Of the $500 million, the company will invest $200-odd million to modernise the unit’s capabilities, while the remaining investment of up to $350 million will be to set-up a new hot end facility to make their steel ‘melt and manufacture’ (subject to approvals). He added that the capex programme is expected to be complete by March 2020. “Access to natural gas at economical prices and the abundant availability of scrap steel in Texas make conditions very conducive to manufacturing through the electric arc furnace route,” Jindal said. He also said that the new steelmaking unit will help the facility end its dependence on steel imports, which was till now importing steel from Brazil, Mexico and India.

“Last year, the unit had production and sales of 300,000 tons. This will triple post the modernisation,” he said. Since the acquisition of the facility for $810 million back in 2007, JSW Steel has invested $1.2 billion in it over the last decade. Governor Abbott said, “This investment will strengthen our overall partnership and generate more economic activity in the great state of Texas, creating up to 500 new jobs as well as provide high-quality steel products to our nation.”

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.