In an apparent bid to maintain its presence in India, South Korean steel major POSCO is keen to revive the joint venture project with Steel Authority of India ltd (SAIl), which both the companies had initiated in 2007 to set up a 3 million tonnes per annum capacity plant in Bokaro, Jharkhand. According to sources privy to the development, the issue of reviving the JV project was discussed during a meeting between POSCO India Chairman and Managing Director Gee Woong Sung and Korean Ambassador Joon-Gyu lee on Tuesday (January 20) with Prime Minister Narendra Modi.
The 50:50 JV project in 2012 had gone in deep freeze, as POSCO had stuck to its guns and repeatedly sought greater equity stake in it on the logic that it was bringing its patented FINEX technology for steel making in the proposed plant. After several rounds of deliberations between POSCO and SAIl, the project had failed to take off as the South Korean entity had refused to budge from its stand.
Now the move by POSCO to revive the project, according to sources, comes at a time when the Government has promulgated the mining ordinance which entails auction of mining leases. This has derailed POSCO’s repeated efforts of seeking mining lease for exploiting the Khandadhar iron ore reserve to address the raw material requirement for its ambitious 12 million tonnes per annum steel plant which is to come up in Odisha.
The company will now have to bid for the afore-mentioned reserve along with other entities, and this is likely to further its plan of setting up the steel plant in Odisha’s Jagatsinghpur district, the MoU for which had been signed with the state government in 2005. Sources pointed out that POSCO being clearly aware that the Odisha project (which was to be India’s first major Greenfield project) now faces incessant delay due to the promulgation of the ordinance, is now keen to revive the Jharkhand JV project.
When contacted, a POSCO representative told The Pioneer that there was no specific project related agenda during the meeting with Modi. While denying that the company plans to exit the Odisha project, the representative refused to comment when asked whether POSCO is planning to revive the Jharkhand JV project.
However sources said that in an effort to maintain its presence in India, POSCO is eager to revive the JV project. They at the same time emphasised that it would be interesting to see whether POSCO will still stick to its condition of seeking greater equity share in the project, considering that now it is at a relatively weaker wicket.
SAIl and POSCO had first inked a MoU in 2007 to set up the 3 million tonnes per annum steel plant near SAIl’s existing steel making facility at Bokaro. later, they subsequently signed another MoU in 2009 to further expand the scope of the JV. Despite efforts by the Steel Ministry as well as SAIl, POSCO at that time had refused to budge from its position of seeking greater equity stake (51 per cent) in the project. Now though the situation has changed drastically, and if at all the talks begin to revive the JV, they will take place on an even keel, sources said.
POSCO (formerly Pohang Iron and Steel Company) is a multinational steel-making company headquartered in Pohang, South Korea. It had an output of 39.1 million tonnes of crude steel in 2011, making it the world’s fourth-largest steelmaker by this measure. In 2010, it was the world’s largest steel manufacturing company by market value. Also, in 2012, it was named as the 146th world’s largest corporations by the Fortune global 500.
POSCO currently operates two integrated steel mills in South Korea, in Pohang and Gwangyang. In addition, POSCO operates a joint venture with US Steel, USS-POSCO, which is located in Pittsburg, California, United States.