Indicating that differences between state-run Steel Authority of India Ltd (SAIL) and world’s largest steel company ArcelorMittal SA for setting up an automotive steel unit have been resolved, India’s steel minister Chaudhary Birender Singh on Thursday said the joint venture between the two companies may be signed within next 2-3 weeks.
Singh was speaking at the launch of InfraCircle in New Delhi. InfraCircle on 29 September reported the proposed $1 billion automotive steel plant joint venture (JV) between ArcelorMittal SA and SAIL was facing problems due to various financial issues.
“There are some differences regarding pricing and all, but I think most of the things have been narrowed down to a great extent, and I am hopeful that if all goes well, then we will have a JV, which is to be signed. And I hope, it may be signed within next 2-3 weeks,” said Singh.
The two companies signed a memorandum of understanding (MoU) in May 2015 to explore the possibility of setting up an automotive steel manufacturing facility in India. The minister further added that negotiations were still on and both SAIL and ArcelorMittal are keen to clinch the issue by the end of December.
“If the issues are settled by this month-end, it would be good, but still there is time,” Singh added. As per the MoU, both companies can negotiate the issues till May next year.
According to a joint statement issued by SAIL and ArcelorMittal on 30 August, hot-rolled input products for the proposed facility are to be supplied by the former’s new hot-strip mill in Rourkela, Odisha, making the entire value chain indigenous.
However, ArcelorMittal is seeking supply of steel for the proposed project below the market price. Also, the global steel major is asking for a licence fee for use of its technology. This is estimated to be charged at the rate of 6% of the selling price per tonne of steel. The government had earlier said the proposed JV will be finalised by December.
According to information available on the website of SAIL, India is poised to become the world’s third largest automobile manufacturing nation by 2026, with passenger vehicles likely to grow from approximately 3 million units to over 7 million units in the next 10 years.
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