Nashik: Germany’s Thyssenkrupp AG will take till the end of the year to set up its joint venture with Tata Steel UK Ltd, about six months later than it had earlier indicated, as negotiations between the steel makers and their workers are taking longer than estimated.

In September 2017, Thyssenkrupp AG and Tata Steel UK had said that they would combine their steel making capacities in Europe into an equal joint venture. This would make their combined operations the second largest in the continent, after ArcelorMittal.

However, talks with labour unions have taken longer than expected. “We’re still in discussions with the unions. After that, we will have to get approval from Europe’s competition authority. We expect the deal to close before December," said Jens Overrath, chief executive of Thyssenkrupp Electrical Steel.

The deal closure date has been pushed from March 2018 to June and now December. Thyssenkrupp’s labour union has asked for guarantees on jobs, plants and investment before they support the merger. While the support of the unions is not strictly necessary for the deal to go through, getting the workers on board will prevent labour strikes later.

Overrath was in India to inaugurate the manufacture of cold-rolled grain-oriented (CRGO) electrical steel at the company’s Nashik plant. The plant, with a capacity of 35,000 tonnes of CRGO a year, is the first in India to produce such high grade steel. CRGO steel’s primary use is in transformers. The high-grade steel is designed to cut transmission losses for power distribution companies and make electricity more affordable for consumers. Indian demand for CRGO is at 400,000 tonnes currently, all of which is met by imports.

Overrath said that 15% of Thyssenkrupp’s CRGO exports go to Asia, of which India is the biggest market. The Nashik plant will meet part of Indian and South Asian demand, particularly Indonesia, Malaysia and Sri Lanka. The plant can be expanded quickly to 50,000 tonnes a year capacity, if demand picks up, Overrath added.

Thyssenkrupp Electrical Steel India is a unit of Thyssenkrupp UK and will be part of the joint venture with Tata Steel.

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