Calcutta, Aug. 11: Korean steel major Posco's decade-old plan to build an integrated plant in India received a boost after the company signed an agreement with Mumbai-based Shree Uttam Steel & Power Ltd today for a 3-million-tonne (mt) facility in Maharashtra.
The project will come up in two phases of 1.5mt each, with the first phase requiring an investment of $1.5 billion, or Rs 10,000 crore.
"We will have 80 per cent stake in the joint venture, while Posco will hold 20 per cent. However, the equity structure may be revisited as we go along," Ankit Miglani, director of the Uttam Galva group, told The Telegraph.
Shree Uttam is fully owned by the Miglani family, which is the co-promoter of listed entity Uttam Galva Steels Ltd along with ArcelorMittal. The Miglani and Mittal families are related through a matrimonial alliance.
Even though Ankit Miglani said ArcelorMittal - the world's largest steel maker - would not be a part of this venture, the shares of Uttam Galva Steels today zoomed 7.93 per cent on the BSE amid a weak stock market.
The proposed plant will use Posco's proprietary Finex technology that can use low-grade iron ore fines in blast furnace instead of lumps, which is popular among local steel makers.
The plant will be located in Satarda in the Sindhudurg region on the Goa-Maharashtra border. The Miglani family owns 2,000 acres of privately purchased land in the area. "Fines are available in abundance in Goa. We will use that. Work on the site will start after the next monsoon. During this period, a detailed project report will be prepared to ascertain the configuration and techno-commercial feasibility," Miglani added.
The land will be a valuable equity from the Miglani family in the project given the fact that many integrated steel plants, including Posco's $12-billion project in Odisha, have failed to take off because of resistance to land acquisition.
Last month, the Korean major said it had shifted focus from Odisha citing "no progress" in the project. ArcelorMittal has also failed to make much headway in three of its ventures in Jharkhand, Odisha and Karnataka in the absence of coal and iron ore mines and land acquisition and regulatory approvals.
The Maharashtra plant will produce 3mt hot-rolled coil, which is the raw material for Uttam Galva Steels, one of the largest manufacturer and exporter of value-added steel products in the country. The company procures hot-rolled coil, processes it into cold rolled coils and further into galvanised plain and colour-coated coils. The company's manufacturing facilities are located at Khopoli, Maharashtra.
Posco also has its 2mt value-added steel making unit at Raigad in Maharashtra where it uses HR coils to produce galvanised and galvannealed steel used in automobiles and consumer durables.
