The JSW Steel may opt to supply primary steel from its India-based facilities and convert them into high margin products in Italy. “Given the high margins for these products in Europe, this would make sense,” said an executive from steel industry.
Aferpi at present is working on projects that include production of 1 million ton of long steel products and revamping of wire rod and bar mills, installation of one electric arc furnace of 1 million ton capacity, with two continuous casting machines.
JSW Steel, India's largest private steel company inked a pact with Algeria's Cevital to buy its Italian arm Aferpi for around ₹ 600 crore.
The Sajjan Jindal- owned firm had earlier tried to acquire the second largest plant in Italy in 2014, when it was known as Lucchini. The Algerian conglomerate Cevital, however, acquired Lucchini and renamed it Acciaierie e Ferriere di Piombino ( Aferpi).
The acquisition will help JSW to expand its reach in the specialized steel market, particularly in the auto sector. The deal will also mark a comeback by JSW Steel, which had lost out of Cevital in 2014, to buy Aferpi (known as Lucchini then).
Aferpi has a capacity to produce 2.5 million tons of steel every year. It used to have an employee-strength of 2,000. Its operations include a blast furnace, a steel mill, a coke oven and a ports. Aferpi makes a wide range of quality and special steel for rails, wire rods and bars for railway, automotive, earthmoving vehicles, energy, fastening, springs and welding.