On the rolls

Calcutta, July 5: The UK-based Arcelor and Nippon Steel Corporation of Japan are planning a joint venture in India and are looking for an ally.

Sources said the venture would be a part of the global strategic alliance between Arcelor and Nippon Steel.

The two companies have set up a similar joint venture in China with a local partner — Bao Steel — to produce auto-grade steel. The Chinese joint venture will set up a 2 million-tonne plant in Shanghai to produce auto-grade steel at an investment of €800 million.

“The Indian joint venture too will cater to the rising demand for special-grade steel from auto companies,” they said.

Sources said the Arcelor-Nippon combine is scouting for a partner in India to set up an auto-grade steel mill. Reports suggest that Arcelor is in talks with Tata Iron & Steel Company (Tisco) for the joint venture.

There is some technological tieup at present with Arcelor and Nippon Steel to produce good-quality auto-grade steel, a Tisco spokesperson said. “But as far as I know, no joint venture proposal has been discussed between Tisco and Arcelor,” he added.

Sources said the Arcelor-Nippon combine is exploring the possibility of setting up a 1 million-tonne special auto-grade cold-rolled mill, which might be based in the western region of the country.

“The western region has seen the highest growth in the auto ancillary industry. Hence, having a finishing mill there will offer a tremendous advantage,” sources said.

The Arcelor-Nippon combine signed an agreement with Tisco on April 10, 2002 to work jointly on technical development to cater to the domestic automotive market.

Last year, Arcelor granted a licence to Tisco to use its technology in to hot-dip galvanised products. The licence covers pure zinc hot-dip galvanising and related products produced in Tisco’s Jamshedpur plant.

Sources said since Tisco already has a strong business association with Arcelor, it is the most likely partner for the proposed finishing mill.

Tisco, which will make a fresh investment of Rs 7800 crore to add 7.5 million tonnes of fresh capacity over the next seven years, is focused on auto-grade products.

The company has a current capacity of nearly 4 million tonnes and work is on to increase it by 1 million tonnes.

Arcelor, a €26.6-billion company, has a current capacity of 44 million tonnes. The company sees a growth of over 4 million tonnes in the next couple of years either through acquisitions or a greenfield project.