Steel Authority of India Limited (SAIL) and ArcelorMittal are about to sign a joint venture to set up a ₹ 5000 crore plant to make steel for automobiles early next year. The differences between SAIL and ArcelorMittal have narrowed down but still remain in areas such as royalty rates and raw material pricing, which need to be sorted out over the next 2 - 3 months, said steel ministry officials.
The 1.5 MT (million tonnes) automotive steel plant will be a 50-50 joint venture, with SAIL (Steel Authority of India Limited) supplying raw material from its Rourkela steel plant. This is pay off a plan drawn by SAIL to improve its top line.
The new automotive steel plant is an ambitious plan of Govt of India (for which MOU was signed in 2015) as it wants to unlock value in successful state run companies through partnerships with foreign players, who will bring in the latest technology. According to steel ministry officials, the Govt of India wanted SAIL to enter the field of automotive steel as it has been a fast-growing sector in steel industry and talks with ArcelorMittal were initiated as technology in this field is at premium.
In early discussions between SAIL and ArcelorMittal the tiff was over the equity structure. SAIL wanted majority holding in a manner similar to Tata's automotive steel venture set up in collaboration with NipponSteel and Sumitomo, while ArcelorMittal wanted more say.
SAIL's differences with ArcelorMittal are now focused on royalty fees and SAIL's raw material prices.
Products of the proposed new automotive steel plant will include specialised steel for infrastructure (ports), engineering (ship-building), defence and nuclear power plants, high grade construction steel, specialised steel for capital goods industry such as making pressure-vessels and electric grade steel.
(Source: The Telegraph; edited)