Posco, SAIL in talks for JV in Bokaro
19 Mar 2010
Posco, the world's fourth largest steel producer is in talks to strike a joint venture with Steel Authority of India (SAIL) to set up a half a million tonne steel plant in Bokaro with an investment of approximately Rs15,000 crore.
As the Pohang, South Korea-based Posco's June 2005 project to build a 12-million-tonne green field steel plant near Paradip, Orissa still mired in land procurement problems, Asia's most profitable steelmaker is planning to build a new plant in SAIL's 20,000 acres surplus land at its existing plant in Bokaro.
SAIL's 4.5-million-tonne (mt) plant in Bokaro uses 14,000 acres of the 34,000 acres it has and has a surplus land of 20,000 acres, which can be used to build the new plant.
The current negotiations on joint venture steel plant is based on the MoU signed by both companies in 2007 to establish a strategic alliance for aligning and cooperating with each other in a wide range of strategic business and commercial interest areas. (See: POSCO, SAIL in wide ranging partnership pact)
The two companies had agreed to cooperate in information sharing in the area of corporate strategy planning; exchange of engineers, technicians and other professionals; sharing of know-how and expertise in the areas of development of mines and business practices such as ERP, PI and Six Sigma; joint utilisation of each other's existing marketing and warehousing network; and coordination in procurement of coking coal, nickel and ferro-alloys and engagement of transportation vessels.
Under the deal being negotiated, Posco will invest the money to build the plant and bring in its eco-friendly Finex technology, an innovative, next generation technology that uses low-grade iron ore fines to produce steel, while SAIL will provide land as its share in the JV.
SAIL will be holding a 40 per cent stake, while Posco will hold the remaining majority of 60 per cent.
The steel ministry had granted SAIL the rights to 1-billion-tonneiron ore reserves from the nearby Chiria mine for its existing plants and another 1 billion tonne if and when it sets up a 15 million tonne plant.
