Posco will hold minority stake in the 1.5 mtpa steel plant
State-owned SAIL and Korean major Posco have decided to join hands again for setting up a 1.5 million tonne per annum steel plant at Bokaro at a likely investment of R6,000 crore to cater to the growing demand from the automotive sector.
A steel ministry official said the two are in the final stages of negotiation to sign an agreement soon as the first step is to form a joint venture in which the Korean steelmaker will hold a minority stake.
The two had in 2011 inked an MoU for setting up a 3 mtpa plant in Bokaro, but that could not fructify as both sides were unwilling to yield majority stake to other. However, this time the chances of the proposed venture taking off is high as the shareholding issue has already been resolved, though the size of the proposed plant has been pruned to half.
The proposed new venture would use Posco’s patented Finex technology which can produce iron with low-grade ores also. If materialises, this would be the first plant to be set up on the Finex technology outside Korea, where Posco has a 1.5 mtpa capacity.
The proposed MoU would be SAILs’ second within a short span of time. Earlier this week, the company signed similar a pact with world’s largest steelmaker ArcelorMittal with the objective of setting up a 1.5 mtpa steel plant at Rourkela in Odisha at an investment of Rs 5,000 crore.
The official said the plant would cater to the burgeoning demand of the automotive sector which mainly uses imported steel to meet its present need. As the demand for steel from the sector is bound to increase, the JV would aim at cashing in on the opportunity.
SAIL has been scouting for partners to exploit the opportunities to produce high-grade automotive steel making sensing the compelling need for raising the ratio of value-added products into its kitty as it fetches higher margins. India’s automobile sector is forecast to double to 7 million units by 2020.