Sajjan Jindal-led JSW Group and South Korea’s POSCO Group on Tuesday signed an agreement to set up an integrated steel plant in India with an initial capacity of 5 million tonne per annum (MTPA).
In addition to steel, the two companies will also collaborate for green energy production and manufacture of battery materials for electric vehicles (EVs).
“This memorandum of understanding (MoU) with POSCO marks a significant step forward in our journey to contribute to the Indian steel industry. As one of the world’s fastest-growing economies, India presents tremendous opportunities for sustainable growth and our partnership with POSCO strengthens JSW’s commitment to drive that transformation,” Sajjan Jindal, chairman, JSW Group, said.
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India’s steel demand is forecast to grow 6% annually through 2035 to reach 240-260 million tonne, according to McKinsey & Co, driven by infrastructure construction, transport and consumer appliances.
“This collaboration will contribute significantly to the economic development of Korea and India and drive our joint efforts towards a more eco-friendly and sustainable future,” Chang In-hwa, chairman of POSCO said. The MoU was signed at JSW Group’s corporate headquarters in Mumbai, in the presence of Jindal, POSCO chairman and senior executives from both the business houses.
JSW Group did not give details of the investment or location of the proposed steel plant, or other details regarding the MoU.
JSW had announced an investment of Rs 18,000 crore in 2019 to ramp up the capacity at its Vijaynagar facility by 6 MTPA. Industry estimates put the investment for the project with POSCO at Rs 15000-20,000 crore accounting for inflation and depending on the location of the plant.
While the JSW Group did refer to the association as joint venture, it did not clarify the nature of the partnership in terms of the equity infused by each partner.
JSW Group did not respond to queries on the matter till the time of going to press.
The state-run South Korean steel firm has made multiple attempts to set up a large-scale steel unit in the country. Some of the previous efforts came to naught on account of land disputes or challenges on the Indian partner’s end.
Back in 2005, the company signed an MoU with Odisha to invest $12 billion to set up an integrated steel plant in the state with a capacity of 12 million tonne of crude steel and 11.28 million tonne of finished steel annually. The project, however, ran into many issues including public resistance to give up land for setting up the plant, regulatory hurdles around environmental clearances and mining scams. In 2011, the MoU term expired.
POSCO made another attempt to set up an integrated steel plant in Andhra Pradesh through its partnership with Rashtriya Ispat Nigam (RINL) in 2019. A joint working group was formed comprising RINL and POSCO officials to prepare a pre-feasibility report with respect to their plans to set up the mega steel facility in the state.
This attempt was also thwarted as the government of India decided to proceed with the strategic disinvestment in RINL in 2021.
More recently, POSCO signed an MoU with the Adani Group in January 2022 which includes the development of an integrated steel mill in Mundra, Gujarat.
From: financialexpress
Financial News
