Nippon, Tata Steel in talks for JV

Tata Steel is in talks with the world's second largest steelmaker Nippon Steel Corporation on a possible joint production of car-use sheet steel to meet the growing demand in the country.

Sources close to the development said the proposed unit would have an annual production capacity of 1 million tonne of auto-grade steel and would require an investment worth Rs 1,900 crore. The new plant will be ready for commercial production in three years.

The sources said Nippon Steel President Akio Mimura and Tata Steel Managing Director B Muthuraman recently met to discuss the proposed venture.

A Tata Steel spokesperson confirmed that the companies had started discussions. However, the location of the plant has not been finalised, he added.

"We are considering carrying out studies while monitoring (steel) demand and other situations," Nippon Steel said. Rivals such as Arcelor Mittal and Posco are also setting up large plants in India.

The move would make Nippon the first Japanese steelmaker to gain access to the fast-growing Indian market.

It may also induce Japanese car makers such as Toyota, Suzuki Motor Corp and Honda Motor to up their production capacities in India.

The steelmaking capacity in the country is expected to double to 80 million tonne a year by 2012. Global auto companies have been setting up shops in the country to obtain a bigger slice of the domestic car market.

Japan's Nissan Motor, Renault of France and Mahindra & Mahindra have agreed to construct a new plant in Chennai at an investment of Rs 4,400 crore in seven years.

Tata Steel has a technical tie-up Nippon Corporation for the production of automotive steel.

Nippon is also assisting Tata Steel in planning the layout of its Kalinga Nagar plant in Orissa.

Nippon Steel, the world's second-largest producer after Arcelor Mittal, is keen to enter emerging markets. In China, it has a sheet steel joint venture with Baosteel group's listed unit, Baoshan Iron & Steel Co, and Arcelor Mittal in Shanghai. In Brazil, it has teamed up with Usiminas.

Tata Steel recently acquired the Anglo-Dutch steelmaker Corus for $13 billion, the largest-ever overseas acquisition by any Indian company. Post-acquisition, Tata Steel has a production capacity of 23 million tonne a year.