Centre leaves UPA’s POSCO behind as SAIL moves ahead with ArcelorMittal

Centre leaves UPA’s POSCO behind as SAIL moves ahead with ArcelorMittal

By NAVTAN KUMAR | NEW DELHI | 30 April, 2016
The Steel Authority of India Limited will be setting up an automotive steel facility with the world’s largest steel producer, Luxembourg-based ArcelorMittal, putting on hold its proposed collaboration with South Korean steel maker Posco, which was to partner SAIL for a steel plant as envisaged under the erstwhile UPA government led by former Prime Minister Manmohan Singh.
Though no formal decision has been taken in this regard, sources said the Posco plan is not the government’s priority anymore. “Nothing is happening on the Posco front,” a source familiar with the development, said.
Posco has already pulled out of its Karnataka project, where it had plans to set up a 6 million tonne per annum (MTPA) facility, though its 12 MTPA Orissa project is still “on”, despite hiccups.
SAIL and Posco had decided to set up a 3 MTPA capacity steel plant at Bokaro (Jharkhand) through a joint venture for which an MoU was signed in 2010 under the UPA II government, when the steel ministry was headed by Virbhadra Singh. The estimated cost of the project was Rs 16,000 crore. Following the announcement, a team of top Posco officials had surveyed the Bokaro steel plant. The Centre is also working on a new plan to set up a 6 MTPA greenfield steel plant in Jharkhand. 
Confirming the development, Minister for Steel and Mines Narendra Singh Tomar told this newspaper that “there was no progress (on the Posco front), and there is no progress even now”. When asked about the fate of the project, he said SAIL may think about the proposal if Posco expresses its intention to move ahead.
“There were several discussions on the issue (of SAIL’s joint venture with Posco) earlier, but there was no progress. It never came to my notice,” said the minister.
Tomar, however, said there is a significant progress with the proposed joint venture (JV) with ArcelorMittal: “Negotiations (with ArcelorMittal) are going on. Their team has inspected different sites. It is up to them where they want to set up the proposed unit,” he said. He added that the ministry is working on its plan to set up greenfield steel plants in Jharkhand, Orissa, Chhattisgarh and Karnataka in collaboration with public sector undertakings. 
From the very beginning, SAIL and Posco had differences over shareholding pattern. Sources said Posco had been insisting that it should hold the majority shares since the Korean government had funded and patented the non-coking coal, environment-friendly technology Finex. It had said it would not clear a JV in which it had less than 51% stake. SAIL, however, was opposed to the idea. 
Sources said SAIL is moving ahead with its proposal to set up an automotive steel manufacturing facility with the ArcelorMittal, under a joint venture agreement, the MoU for which was signed in May 2015. The proposed JV will construct a cold rolling mill and other downstream finishing facilities in India which will offer technologically advanced steel products to India’s growing automotive sector. 
SAIL sources said a joint task force consisting of top officials of SAIL and ArcelorMittal is working to prepare a Feasibility Report. “After the Feasibility Report is ready, the JV will be formed,” he said. He refused to give any time-frame for the same.
ArcelorMittal officials remained tightlipped about the development. An email sent to the company remained unanswered till the time this story went to press. However, sources said the talks between ArcelorMittal and SAIL are going on in a positive direction and the broad contours of the project will emerge soon. ArcelorMittal officials have visited SAIL’s Bokaro and Rourkela plants. According to sources, one of the two plants may supply automotive steel to the JV. Even as the Posco project with SAIL in Jharkhand lies in cold storage, the ministry is working on its plan to set up a greenfield steel plant of 3 million tonne per annum (MTPA) capacity in Jharkhand through a special purpose vehicle (SPV) for which National Mineral Development Corporation (NMDC) and Jharkhand State Mineral Development Corporation (JSMDC) have signed an MoU. The estimated cost of the project will be Rs 18,000 crore. Besides, three more plants would be set up in Chhattisgarh, Orissa and Karnataka through the SPV route.
 

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