Tokyo, May 23 (AFP): Japan’s Kobe Steel will start production in India by 2009.

The company is in talks with the Chowgule group to set up a steel mill in Goa, the Nikkei Business Daily has reported.

The company will use its technology to bring the raw material costs down to a third of current levels, the report added.

The mill will have a capacity to produce 500,000 tonnes a year. The Japanese firm will invest 20 billion yen ($165 million) in the plant.

Kobe Steel and the Chowgule group are expected to reach a final agreement over the next few months and begin construction by year-end, the report said.

In addition to India, Kobe Steel is in talks with a US electric furnace steel maker to begin construction of a mill in Minnesota by the end of this year. It is also planning a production facility in Australia.

As the steel industry restructures worldwide, Japanese steel makers are also racing to go global.

Nippon Steel, the world’s second largest steel maker after Arcelor Mittal, is in talks with Tata Steel, one of India’s top steel makers, to produce steel sheets for Japanese auto makers operating in India by 2010, earlier reports had said.

Japanese auto makers — major customers of Japan’s steel makers — have been stepping up their presence in India, which is posting a rapid economic growth. Suzuki Motor Corp holds a majority stake in Maruti Udyog, India’s largest car maker.