SAIL receives joint venture proposal from Tata Steel

SAIL receives joint venture proposal from Tata Steel

Kolkata: State-owned Steel Authority of India Ltd (SAIL) has received a proposal from Tata Steel Ltd, India’s largest private sector steel producer, to form a joint venture (JV) for steel-making, according to SAIL chairman S.K. Roongta.

SAIL is considering two other JV proposals: one from Korea’s Pohang Iron and Steel Co. (Posco) and the other from ArcelorMittal, the world’s largest steel firm. SAIL and Posco had signed a JV agreement in 2007.

“SAIL is an established player in India, and these companies see great potential in steel-making in India," Roongta said, adding that all three proposals were being examined closely.

Tata Steel refused to comment.

Talks with Posco have advanced. SAIL has begun zeroing in on potential sites in Jharkhand and Maharashtra for the 2 million tonnes (mt) steel plant to be set up by the JV. The two companies could also set up a plant to produce high strength low-alloy steel, Roongta said.

SAIL has initiated discussions with ArcelorMittal, too, for setting up a plant together, he added.

Private steel producers are keen to join forces with SAIL because of its huge iron ore reserves. Both Posco and ArcelorMittal have been trying for years to set up operations in India, but have had little success so far. For them, the key problems are availability of land and access to iron ore reserves.

“Such JVs are a good thing for the Indian steel industry," said Anjani K. Agrawal, partner (metals and mining) at consulting firm Ernst and Young. “In my view, technology is one of the key drivers for such JVs."

He was not commenting on the specific JV proposals that SAIL is considering.

On its own, SAIL could expand its annual production capacity to 45-50 mt. It could ramp up capacity to 60 mt by forming JVs with private players, Roongta said.

SAIL currently produces around 14 mt of steel a year. Its production capacity is being expanded to 23.5 mt by 2013. In fiscal 2011, SAIL is going to spend up to Rs12,000 crore on its ongoing expansion.