Govt gives Posco majority in JV with SAIL

The steel ministry has agreed in principle to give a majority stake to South Korean steel giant Pohang Steel Company (Posco) in its proposed venture with the state-run Steel Authority of India Limited....

The steel ministry has agreed in principle to give a majority stake to South Korean steel giant Pohang Steel Company (Posco) in its proposed venture with the state-run Steel Authority of India Limited (SAIL) to jointly set up a 3.5 million tonne integrated plant in Jharkhand at an estimated expenditure of nearly Rs 15,000 crore.

During our recent visit to Seoul,we had fruitful discussions with Posco for setting up a steel plant jointly at an estimated expenditure of about Rs 15,000 crore with SAIL at Bokaro. The first phase would be about 1.5 MT and we expect that a memorandum of agreement would be signed with it within the next two months, steel secretary Atul Chaturvedi told The Indian Express. The matter is expected to come up shortly before SAIL board,which will have to ratify it before executing the MoA. SAIL chairman S K Roongta had yesterday said the navratna company would set up two plants in joint venture with Posco and is in serious stages of discussion with Posco for setting up a plant also in Maharashtra. Alongwith the MoA for Bokaro,Posco is likely to sign the MoA also for the Maharashtra project within two months

Though Chaturvedi did not elaborate further,a highly placed source said that in recent talks with the PSU,the South Korean giant had set a pre-condition that it wanted a majority stake in the proposed venture if it was to give much-touted finex technology. The steel ministry has agreed in-principle to give 51 per cent stake to the company,while the remaining 49 per cent will be with SAIL. He said the initial differences on location of the proposed utility have also been ironed out with SAIL agreeing to provide land inside the boundary wall of its Bokaro Steel Plant complex. The new plant will use the finex technology being provided by Posco,which can use nearly 50 million tonnes of iron ore fines lying unused in SAILs Gua mines. If this is done,it would ease the pressure on the PSU for using only ore lumps for its furnaces.

The JV with SAIL is also likely to give some comfort to the South Korean giant,which has been struggling to acquire land in Orissas Jagatsinghpur district for setting up a 12 MT plant there at an estimated expenditure of Rs 53,000 crore. Meanwhile,steel minister Virbhadra Singh today reminded the steel utilities planning mega expansions to understand the psyche of the land-holders in the areas of the proposed projects by being alive to their sensitivities. Without naming Either Posco or Arcelor Mittal,which have been facing teething problems in Jharkhand,Singh said land should be acquired in a manner whereby those partaking their land should feel that they a part of the project.