The 3 million tonne integrated steel plant at Satarda in Maharashtra would be set up by a joint venture (JV) where Posco will have 20 per cent stake while 80 per cent would be with Shree Uttam Steel and Power Ltd, an arm of Miglani family-run Uttam Galva Group.
It will initially build 1.5 million tonne per annum (MTPA) plant with a new technology from Posco at a cost of about USD 1.5 billion.
A pact in this regard was signed in Mumbai this morning between Shree Uttam Steel and Power and steel giant Posco.
This is the second major manufacturing facility announced in Maharashtra within a week, after Taiwan's contract electronics manufacturer Foxconn this weekened announced a USD 5 billion investment for a plant in the state.
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A Posco India spokesperson said, "The total capacity is 3 MTPA which will be completed in two phases."
The debt equity ratio is 2:1 and the work on project will start in mid-2016, Miglani said.
The project will pave way for Posco's entry into the domestic market as it continues to battle regulatory hurdles for about a decade for its proposed USD 12 billion steel plant in Odisha.
"We have been associated with Posco across various aspects of the steel business over the years. Today's MoU signals our intention to further advance our collaboration with Posco to a higher level."
"This JV will help us to develop a world class integrated steel manufacturing facility in line with the with the government's 'Make in India' initiative," he said.