State-run Rashtriya Ispat Nigam (RINL) and Korean steel major Posco have set up a joint working group (JWG) to facilitate the implementation of the initial pact signed between the two for a five million tonne per annum (MTPA) greenfield steel plant in Vizag with an estimated investment of Rs 35,000 crore.
Representatives of the two companies on July 23 discussed through a video conference the way forward for the proposed greenfield plant. The steel ministry facilitated the meeting.
“During the meeting, it was agreed to set up a JWG consisting of representatives from Posco and RINL to facilitate the implementation of the MoU signed between the two companies regarding investment on land owned by RINL. The JWG would meet regularly to expedite the implementation of the MoU,” a steel ministry note said.
RINL chairman and MD PK Rath said both sides will have one representative each in the JWG.
Posco representatives have already made a number of visits to the RINL’s lone steel-making facility in Vizag to get a first-hand experience of the existing facility, where RINL operates a 6.3-mtpa unit, and explore the means and ways to execute the proposed steel unit.
Prodded by the Prime Minister’s Office (PMO), the steel ministry has been talking with the Korean steel mills to set up a 5-mtpa steel plant through a joint venture, which is proposed to produce high-end steel meant for automotive and other sectors, aimed at imports substitution.
In the preliminary discussions, the ministry gave the delegation assurance of uninterrupted supply of iron ore, a key raw material in steel-making and the required land for the proposed unit, being envisaged in line with the PM’s ‘Make in India’ programme.
The PMO had earlier instructed the steel ministry to “hold discussions with the concerned ministries/parties to facilitate domestic manufacturing of high-grade steel with the help of Japanese and Korean companies”.
Apart from their rich experience in the manufacturing of value-added steel, the particular reference to the Japanese and Korean firms in the PMO directive may have stemmed from the fact that India is a regular exporter of iron ore to the Japanese steel mills (since 1963) and Posco, South Korea (since 1973).
As part of India’s bilateral relations, India exports iron ore to Korean Posco and some Japanese steel mills. However, the quantity of exports is small. At the same time, India imports value-added steel from these countries. The steel ministry thinks that the plant will be a win-win for both the parties.
The proposed venture will add muscle to India’s capacity augmentation effort, under which the government has targeted to jack up the domestic installed steel-making capacity to 300 mtpa by 2030-31 from around 142 mtpa now.
South Korean major Posco has been trying hard to enter the Indian steel-making space since long. It signed a pact with the Odisha government way back in 2005 for a 12-mtpa plant, but subsequently scrapped the plan. In 2007, it had signed an initial pact with state-run Steel Authority of India to form a JV in India, but that too did not succeed.