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Bokaro steel shines - Posco, SAIL in pact talks

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  • Published 19.03.10

Calcutta, March 18: Vast stretches of free land and the lure of high-grade iron from the Chiria mines are bringing Korean steel major Posco to Bokaro.

The company, which has been waiting for the last five years to make some headway in Orissa for its $12-billion project, will team up with public sector Steel Authority of India Ltd (SAIL) for the Jharkhand venture.

Both the companies have been in talks for some time and have now zeroed in on Bokaro where SAIL runs a steel plant.

The PSU unit is spread over 34,000 acres, but the company needs only 14,000 acres for its current operation. The rest can be used for a new plant.

SAIL had earlier proposed to build a plant on its own to secure Chiria’s iron ore deposits.

A Posco spokesperson confirmed the plan of setting up an integrated plant with SAIL in Bokaro but said talks were at an initial stage.

SAIL officials were unavailable for comment.

It is learnt that the PSU will give the land as its share of investment in the project. Posco will build the plant, bringing in its Finex technology that uses low-grade iron ore fines to produce steel.

Posco will own 60 per cent in the project, while the rest will be with SAIL.

The Posco team, led by CEO Chung Jun-Yang, in a dinner meeting with SAIL and steel ministry officials on Monday formalised the deal. The team visited the plant site on Tuesday. Posco officials had visited Bokaro earlier, too.

SAIL runs a 4.5-million-tonne (mt) plant in Bokaro; its capacity is being ramped up to 7.5mt as part of the PSU’s Rs 70,000-crore expansion programme.

Posco and SAIL are already in pact for the supply of technology and technical know-how.

Incidentally, SAIL had earlier proposed to build a 15mt plant in Jharkhand in return for a promise from the former government of Madhu Koda for access to Chiria mine reserves.

Both Koda and before him, Arjun Munda, ran into a spat with SAIL over Chiria with the state government cancelling the PSU’s mining lease.

The steel ministry, under Ram Vilas Paswan, then proposed that SAIL be given rights over 1-billion-tonne reserves for its existing plants and another 1 billion tonne when the PSU sets up a 15mt plant.

If the deal goes through, SAIL will get access to Chiria without spending much.

However, Posco will benefit more as it can now hope to build an integrated plant without facing resistance over land acquisition as in Orissa. Local protests have so far held back the project.

On the capacity of the proposed JV plant, agencies said the two companies could begin with half-a-million-tonne unit and scale it up to 4-5mt at an investment of Rs 15,000 crore.

Observers said a potential Posco-SAIL deal could change the paradigm in the steel industry. It will prompt other international companies such as ArcelorMittal, Nippon Steel, JFE Steel, Sumitomo and local majors such as Tata Steel, JSW and NMDC to forge alliances and overcome the delay caused by problems over land acquisition and mine allocation.

Double treat

Global steel giant ArcelorMittal is set to relocate its proposed Rs 50,000-crore steel project at Khunti-Gumla in Jharkhand to Bokaro district because of problems over land acquisition.

“ArcelorMittal has informed us that they want to shift to Petarwar (Bokaro) and need about 2,000 acres for the first phase of the project,” Jharkhand mines and industries secretary N.N. Sinha said.