Mumbai : JSW Steel today said it has formed a 49:51 joint venture with UK-based trader to put up a greenfield facility entailing an investment of $42 million to produce long products in the Republic of Georgia.
Declining to disclose the identity of the joint venture partner, JSW Steel’s Director (Finance) MVS Seshagiri Rao said that the company will have an initial production capacity of 1.75 lakh tonnes and the plant will be commissioned in the current fiscal.
JSW Steel will invest a little below $7 million in the joint venture which would be funded through a 2:1 debt-equity mix.
“The debt portion has already been tied-up and work on the project started,” Rao said.
Half of the debt part has been funded by the European Bank for Reconstruction and Development while the second half has been syndicated, he added.
“Georgia is an exciting place. It consumes half a million tonne steel a year and is entirely dependent on imports. However, it exports scrap, but does not make finished steel,” he said.
It is also a good source for cheap hydro power and thus along with local availability of scrap, steel making will be economical, Rao said.
He also said JSW Steel will invest Rs14,000 crore by 2010 to jack up its steel making capacity to 11 million tons a year from 4.8 million tons now.
“In the current fiscal, JSW Steel will invest Rs5,800 crore and the remaining in the next year,“ Rao said adding that the capacity expansion to 6.8 million tonnes at the Vijaynagar facility would be completed within this calendar year, six months ahead of schedule.
JSW Steel has plans to further increase the steel making capacity of its Vijaynagar plant to 10 million tonnes by 2010.
It will also double the installed capacity of Southern Iron and Steel Company from one million tonne now.
JSW Steel plans to manufacture 32 million tons capacity by 2020. It is putting up greenfield plants in West Bengal and Jharkhand of 10 million tonnes each.
On the raw material side, the company has zero self-sufficiency on cooking coal and 25% for iron ore.
JSW Steel targets to have 50% self-sufficiency on coal and 75% on iron ore by 2010.