Mumbai/New Delhi: South Korea's Posco on Tuesday joined Uttam Galva group to set up an estimated USD 3-billion steel plant in Maharashtra -- the first Indian facility for the global giant whose USD 12-billion proposed project in Odisha has been stuck in regulatory tangles for a decade.
The 3 million tonne integrated steel plant at Satarda in Maharashtra would be set up by a joint venture (JV) where Posco will have 20 per cent stake while 80 per cent would be with Shree Uttam Steel and Power Ltd, an arm of Miglani family-run Uttam Galva Group.
It will initially build 1.5 million tonne per annum (MTPA) plant with a new technology from Posco at a cost of about USD 1.5 billion.
Shree Uttam Steel and Power is owned by the co-promoters of Uttam Galva Steels Ltd, which is jointly owned by ArcelorMittal. Incidentally, NRI billionaire Lakshmi Mittal- led ArcelorMittal invested in Uttam Galwa after facing years of regulatory delays for its own proposed projects in India.
A pact in this regard was signed in Mumbai this morning between Shree Uttam Steel and Power and steel giant Posco.
This is the second major manufacturing facility announced in Maharashtra within a week, after Taiwan's contract electronics manufacturer Foxconn this weekened announced a USD 5 billion investment for a plant in the state.
"The MoA is the first step of a process to establish a JV between the two companies. To start with, Miglani family will hold majority stake of 80 per cent and POSCO will hold remaining 20 per cent in the JV. The terms will be revisited as the project progresses," Uttam Galva Steel deputy managing director Ankit Miglani told PTI.
The project will be set up with new technology from Posco and initially 1.5 MTPA project will cost USD 1-1.5 billion. It will be funded through bank financing and the company may also tap foreign sources.
A Posco India spokesperson said, "The total capacity is 3 MTPA which will be completed in two phases."
The debt equity ratio is 2:1 and the work on project will start in mid-2016, Miglani said.
The project will pave way for Posco's entry into the domestic market as it continues to battle regulatory hurdles for about a decade for its proposed USD 12 billion steel plant in Odisha.
Miglani said raw material - low grade iron ore -- is readily available from Goa, which is near its plant.
"We have been associated with Posco across various aspects of the steel business over the years. Today's MoU signals our intention to further advance our collaboration with Posco to a higher level."
"This JV will help us to develop a world class integrated steel manufacturing facility in line with the with the government's 'Make in India' initiative," he said.
