Tokyo: Japan’s Nippon Steel Corp and India’s Tata Steel Ltd are in talks to set up a blast furnace facility in India with an initial investment of up to $3.6 billion, the Nikkei business daily reported.
The two companies, which are already planning to form a joint venture for automotive-use steel, could start construction on an integrated steel plant in India as early as in 2013 to tap growing demand there, the newspaper said.
While it was in discussions towards a final agreement on the auto steel venture with Tata nothing has been decided on the reported blast furnace project, Nippon Steel said in a statement.
Shares of Nippon Steel were down 1.4%, roughly in line with a 1.7% drop in rival JFE Holdings.
The proposed furnace would be set up with an estimated investment of ¥200-300 billion ($2.4 billion to $3.6 billion) and a production capacity of 3 million tonnes a year, the Nikkei said without citing any sources.
The newspaper said Nippon Steel is eyeing the venture to increase its production in India and other emerging markets, while also offsetting the negative impact of a strong yen.
The paper said a second furnace was possible if demand increases.
Tata Steel expects to boost its production of high-end steel material used in automotive industry through the joint venture, the newspaper said.
The duo have already agreed to produce automotive cold-rolled steel sheet, with Tata Steel taking a 51% stake and Nippon Steel obtaining 49%.
The venture is expected to set up a facility by the end of fiscal 2012 that will be capable of producing 600,000 tons annually at a Tata Steel mill in Jamshedpur.