The Adani group and South Korean steel major POSCO have entered into a deal to explore business cooperation opportunities, including setting up a green, environment-friendly integrated steel plant at Mundra, Gujarat. The investment is estimated to be up to $5 billion (about Rs 37,000 crore), the Gautam Adani-led group said in a statement on Thursday.
The non-binding memorandum of understanding (MoU) signed between POSCO and Adani intends to further collaborate at the group business level in various industries such as renewable energy, hydrogen, and logistics in response to carbon reduction requirements. Both parties are examining various options to cooperate and leverage the technical, financial, and operational strengths of each other, it said.
“This partnership will contribute to the growth of India’s manufacturing industry and the Aatmanirbhar Bharat scheme championed by the government of India. It will also help in strengthening India’s standing in green businesses,” Adani, chairman of the group, was quoted as saying.
The collaboration includes evaluating a joint integrated steel mill at Mundra based on POSCO’s state-of-the-art technology and cutting-edge R&D capability.
POSCO and Adani intend to utilise renewable energy resources and green hydrogen in line with their ESG (environmental, social, and governance) commitments to sustainability and energy efficiency, the release said.
The South Korean steel producer has been looking to set up a greenfield steel plant in India for over a decade now. In 2005, the company had signed an MoU with the Odisha government to set up a $12-billion plant. However, the company could not make much headway in the state due to sustained protests by locals and environmental concerns.
Since then, POSCO has not participated in the growth story of the domestic steel industry in a big way. It also refrained from participating in the Insolvency and Bankruptcy Code process.
Currently, POSCO runs POSCO-Maharashtra, a 1.8-million-tonne cold-rolled and galvanised mill, regarded as the most advanced automotive steel supplier in India, and four processing centres in Pune, Delhi, Chennai, and Ahmedabad.
The Adani group has been making sizeable investments lately to become the world’s largest renewable energy company.
As on September 30, 2021, the group’s total debt stood at Rs 2.03 trillion, with a debt-equity ratio of 2.6. Among the group companies, Adani Green had the highest debt-equity ratio of 17.6, with Adani Power carrying the highest debt at Rs 52,748 crore and the second-highest debt equity ratio of 3.9.
- Adani, POSCO sign MoU with Gujarat govt
- POSCO looking to set up steel plant in India since 2005
- POSCO runs 1.8-million-tonne cold roll mills in Maharashtra
- Adani Group debt-equity ratio as on Sep 30, 2021 at 2.6