JSW Steel today said that it plans to close down its US mills for three months from June due to poor demand, but carry out upgradation & modernisation works in the interim expecting better times ahead.
"Our US mills are running at 10-15 per cent capacity now. In stead of running them at that level, we are thinking of temporarily closing them down and carrying out upgradation and modernisation works in the interim," JSW Steel's Joint Managing Director and Group CFO M V S Seshagiri Rao said here.
Rao, however, said that a decision on that front would be taken by the end of the month. The cost for upgradation and modernisation would be 'not much'.
"There will not be any job cuts," he said.
Sajjan Jindal-onwed SW Steel had acquired the mills in the US in November 2007 for $800 million from Jindal Saw, owned by his elder brother P R Jindal. These mills have 1.2 million tonnes of plates and 0.5 million tonnes of pipes making capacity in a year.
Following the acquisition, JSW turnaround these units and reported an EBIDTA of USD 46 million in the first five months of operations upto March 31, 2008. The company further reported EBIDTA of $75 million in the first six months of FY'09. However, following that, due to recession and slump in steel demand, almost all the still mills in the US started running at much lower capacity, Rao said.
JSW Steel had on May 12 said that the recovery would start in the next few quarters following the massive stimulative package announced by the US administration and US operations are expected to pick up soon.
"These units have long-term prospects. They are excellent units. With the upgradation and modernisation, we want to make them ready for the market when it improves. We are not going to sell them out," Rao said.