Last week's signing of a Non-binding Heads of Agreement (HOA) between South Korea's POSCO Group and JSW Group, India's largest privately-owned steel company, adds fresh momentum to their plans announced last October for a joint venture integrated steel works in India.
The agreement confirmed that each will own 50% of the venture, as indicated last October, but the proposed plant's initial crude steel production capacity has been lifted to 6 million tonnes/year, from 5 million t/y as was first announced.
"As part of the next steps, POSCO and JSW will undertake a detailed feasibility study to finalize the plant's location, investment terms, resource availability, and other critical factors," they said in a statement issued following the HOA signing in Mumbai on August 18. Though not legally binding, the HOA mandates exclusive negotiation rights and formalizes business confidentiality.
On October 21 last year, the two companies had inked a Memorandum of Understanding (MoU) for cooperation in steel, rechargeable battery materials, and renewable energy, as Mysteel Global reported.
No timeline has been given for the expected construction and commissioning of the new works, however, or the technology the plant will use and the steel items it will produce. Also, while local and Korean media reported that Odisha State in eastern India had been formally chosen to host the plant, in last week's statement the two merely stated that "Odisha is among the key locations being considered, given its natural resource base and logistical advantages."
The POSCO Group has long targeted the Indian market, having tried unsuccessfully from 2005 to build its own integrated steel plant in Odisha before finally abandoning the plan in 2017 after repeated setbacks, mainly relating to land acquisition, as reported.
The Korean steelmaker already operates a 1.8 million t/y cold rolling and galvanizing plant in Maharashtra State, commissioned in June 2014, and has steel processing plants in New Delhi, Gujarat, Tamil Nadu, and Andhra Pradesh. Once completed, though, the new steel works will not only be POSCO's largest plant in India but also its largest overseas steel mill, according to Korean commentators.
Progressing its India venture follows a recent pattern for POSCO. "Since the inauguration of Jang In-hwa as POSCO Group chairman last year, POSCO has been implementing strategic investments both domestically and internationally to rebuild its steel competitiveness," BusinessKorea magazine observed. "Overseas, POSCO is pursuing an expansion of upstream-focused investments and a complete localization strategy to preempt high-growth and high-profit markets such as India and North America," it noted.
In April this year for example, POSCO signed an MOU with counterpart Korean integrated steelmaker Hyundai Steel to "collaborate" in Hyundai's plans to build an electric arc furnace-based steel mill in Louisiana, U.S.A. "The cooperation will allow POSCO to secure a bridgehead for its entry into the North American steel market," as reported. The two Korean makers hope their planned 2.7 million t/y EAF works will commence production in 2029.
More recently in early August, POSCO was named in an international consortium of steelmakers formed under Australian coated products maker BlueScope Steel bidding to acquire the financially-strapped Whyalla steel works in South Australia. Besides BlueScope (the former BHP Steel) and POSCO, the consortium includes Japan's Nippon Steel and India's JSW Steel, as reported.
"Despite difficult internal and external business environments, we will turn crisis into opportunity by strengthening the fundamental competitiveness of our core businesses," BusinessKorea quotes a POSCO official as saying about its strategy.