Apart from Posco and ArcelorMittal, Tata Steel has also approached Steel Authority of India Ltd (SAIL) for a joint venture. “Preliminary discussions have been held. We are evaluating options, said the SAIL chairman, S K Roongta.
Discussions with ArcelorMittal and Tata Steel are at a preliminary stage, but with Posco, the talks have made some headway. “Initially, we may set up a two million tonne plant, based on Posco’s Finex technology which uses iron ore fines and non-coking coal,” said Roongta, adding it would be win-win for both companies. While SAIL is covered 100 per cent for iron ore, it imports 75 per cent of its non-coking coal requirements.
SAIL signed a memorandum of understanding (MoU) to establish a strategic alliance for co-operation in a wide range of business and commercial interest areas, in 2007. In 2009 another MoU was signed. The locations being discussed with Posco are Jharkhand and Maharashtra.
SAIL already has a joint venture with Tata Steel, but for coal mining; in 2008, SAIL formed a 50:50 joint venture with Tata Steel for this purpose. A JV company, S&T Mining Company Pvt Ltd, was set up. However, the present discussions were for steel making.
Incidentally, all three companies—Posco, ArcelorMittal and Tata Steel—have been facing problems with land and mines in new projects, while SAIL has both in abundance.
When asked whether that was the reason for companies to queue for a venture with SAIL, Roongta said, “That question should be put to them.”
Typically, at most of its existing units, SAIL has used only about half the land. Also, the PSU has access to almost all the iron ore from Jharkhand’s Chiria mines, which has Asia’s largest reserves, following an out-of-court settlement with the Jharkhand government in 2009. Chiria has around two billion tonnes of reserves, of which the Jharkhand government wanted to allot a billion tonnes to the private sector. SAIL maintained it required the entire two billion tonnes.
The matter was fought in court till last year, when SAIL and the Jharkhand government came to a settlement under which almost one billion tonne of reserves was transferred to SAIL and the rest was linked to a new 12-million tonne project in the state. The settlement was a big blow for private companies like ArcelorMittal, JSW Steel, Tata Steel and Essar Steel, all of which were eyeing the reserves for expansion projects. Like Posco in 2005, ArcelorMittal had signed an agreement with the Jharkhand government in the same year to set up a 12-million tonne plant.
Typically, a 12-million tonne plant would require 600 million tonnes of iron ore, leaving very little for the private sector, if at all. Tata Steel, on the other hand, has been facing land issues at Kalinganagar in Orissa, where about half the people were yet to move from the site. The MoU for the project was signed in 2004.
