Mumbai/Bangalore: South Korea’s POSCO Holdings is making a third bid to crack India’s steel market — this time with local giant JSW Steel as partner. The two companies on Monday announced plans to set up a 6 million tonne per annum (mtpa) plant, likely in Odisha. Notably, POSCO’s first attempted steel plant in India, announced in 2005, was also in Odisha.
A joint statement by the two companies did not mention the investment amount. However, two executives aware of the matter said the companies intend to spend ₹70,000-80,000 crore ($8-9 billion) to set up the plant.
According to these executives, who requested not to be named, a 900-acre land parcel that JSW Steel purchased in Odisha during the April-June quarter could be used for the project.
Earlier, during a post-earnings interview in July, JSW Steel chief executive Jayant Acharya had told Mint that no project had been finalised for the land. “This (the land) is closer to the city of Cuttack, Paradeep Port, and the mining area. It makes sense for us to have a land bank in Orissa, and that is why we have acquired it. There is, as of now, no plan, but it is for future expansion, if required for any,” Acharya had said.
The two companies will also collaborate in the area of batteries for electric vehicles, and for captive renewable power for the steel plant.
To be sure, JSW is the world’s 12th-largest steel producer by installed capacity, and POSCO is in the top 10, according to World Steel Dynamics (WSD), a US-based information and benchmarking service for the global steel industry.
JSW Steel and POSCO did not immediately reply to emailed queries seeking further details on the partnership.
Observers were cautious on POSCO’s third entry. “Partnering with JSW Steel—given their scale, land bank, and market clout—does improve POSCO’s chances of success,” said Suman Kumar, vice president for metals and mining at financial services firm Dolat Capital. “However, it’s still too early to say with certainty how it will play out.”
The announcement on Monday shored up JSW Steel’s scrip. The stock ended up 3.68% at ₹1,084.00 per share on the National Stock Exchange (NSE) on Monday, while the benchmark Nifty 50 index rose 1%.
A win-win deal?
Dolat Capital’s Kumar said JSW Steel is known for executing steel projects at a low cost with efficient pipelines and captive mines in Odisha. POSCO, on the other hand, brings advanced technology.
“For JSW Steel, they could leverage POSCO’s technology to make special steels which are imported in India, like electrical steel, grain-oriented and non-grain-oriented steels, and niche alloys. A JV could, therefore, mean technology transfer and local production of these steels,” he said.
As for POSCO, India is an emerging market where steel demand is growing despite a global slowdown, said Kumar, adding that setting up locally gives the Korean major access to demand without being subject to import duties that India imposes on countries like Vietnam, China, or Korea. “Even with a 50:50 JV, POSCO would secure half of the incremental earnings, making the venture financially attractive for them,” Kumar said.
In the joint statement, Acharya said, “This partnership brings together JSW’s proven execution capabilities and strong domestic footprint with POSCO’s technological leadership in steelmaking.”
Parthiv Jhonsa, lead analyst for metals and mining at Anand Rathi Institutional Equities, said the proposed 6 mtpa steel facility, along with collaborations in battery technology and renewable energy, is expected to enhance the market leadership positions for POSCO and JSW Steel, Jhonsa added.
JSW Steel leads India’s domestic steel market, accounting for 27.79 million tonnes of the 151.1 mt produced in India in FY25, followed by Tata Steel Ltd at 21.68 mt.
In 2005, India’s steel production totalled 38.1 mt, with Tata Steel producing 4.10 mt of crude steel and JSW Steel, 1.88 mt. In 2005, India’s top three steelmakers were Steel Authority of India Limited (SAIL), Tata Steel (then known as Tata Iron and Steel Co.), and Rashtriya Ispat Nigam Ltd. The pecking order has since shifted, with JSW Steel leading the pack, followed by Tata Steel, and SAIL.
POSCO’s latest effort to enter India aligns with the Union steel ministry’s ambition to nearly double the country’s steel production capacity to 300 mtpa by 2030 from 151.1 mtpa in FY25.
It also comes as ArcelorMittal Nippon Steel India, a 60:40 joint venture between Luxembourg-based ArcelorMittal and Japan’s Nippon Steel, prepares to increase its steel production capacity in the country from 10 mtpa last year to 40 mtpa by 2035.
“India is central to the future of global steel demand,” Lee Ju-tae, representative director and president, POSCO Holdings, said in the statement. “This initiative represents our commitment to supporting India’s industrial growth while creating long-term value for both organizations.”
JSW Steel reported consolidated revenue of ₹1.9 trillion ($19.34 billion) and net profit of ₹3,491 crore ($399.63 million) in FY25. POSCO Holdings, which follows a calendar-year reporting cycle, posted revenue of WNR 72.7 trillion ($55 billion) and net profit of WNR 948 billion ($720 million) in 2024, producing 33.2 million tonnes of crude steel.
Third time lucky?
In 2005, POSCO announced it would invest $12 billion to set up a 12 mtpa plant in Odisha. It also took up space on the fourth floor of Ashok Hotel in central Delhi, a stone’s throw from the Prime Minister’s official residence. Later in 2010, the South Korean steel giant announced a $5.3 billion investment to set up a 6 mtpa steel plant in Karnataka.
POSCO’s proximity to the decisionmakers, however, couldn’t help it get started in India. In 2013, the company withdrew its plans for investing in Karnataka, and in 2017, pulled out of the Odisha project as well.
At the heart of Posco’s exit from India was its inability to access iron ore mines and acquire land because of regulatory issues. Further, as per media reports, POSCO also faced strong protests from locals in Odisha’s Jagatsinghpur district, who opposed giving up the forestland they depended on for their livelihoods for over a century.
Second partner for JSW
JSW Steel’s joint venture with POSCO is its second such partnership with a foreign steelmaker.
In 2010, JFE Steel Corporation, Japan’s second-largest steelmaker, invested ₹4,800 crore and picked up a 15% in JSW Steel. The billionaire Sajjan Jindal-owned company, which was looking to reduce its debt, capped JFE’s investment at 15%. The Japanese steel firm continues to hold this stake.
In May 2021, JSW Steel announced a memorandum of undertaking with JFE Steel for manufacturing grain-oriented electrical steel sheets, which are mainly used to make the core of transformers and other large electrical machinery.
This led to a joint venture – JSW JFE Electrical Steel – in 2024 to set up a steel plant in Karnataka. Earlier this month, JSW Steel and JFE Steel announced plans to expand capacity at their facilities in Karnataka and Maharashtra. Notably, the Maharashtra plant was acquired through a wholly owned subsidiary of the JV in the same year from thyssenkrupp.