Japan’s third-largest steelmaker, Sumitomo Metal Industries, will acquire a 40 per cent stake in Bhushan Steels’ six-million tonne steel plant project in West Bengal.
Sumitomo would hold 40 per cent in the special purpose vehicle and the balance would be with us, Bhushan Steels Managing Director Neeraj Singal said. The six-million tonne steel plant is likely to entail an investment in excess of Rs 20,000 crore. The notification for land acquisition is expected over the next fortnight. We would finalise the deal once we were at an advanced stage of land acquisition, Singal said. There is a difference in the deal valuation, which is being sorted out.
Bhushan Steel requires 2,500 acres for the project. The memorandum of understanding with the West Bengal government was originally for a two million tonne plant, but once discussions with Sumitomo started, the size of the plant was scaled up to six million tonnes. A captive power plant of 1,000 Mw is also part of the project.
Last year, Bhushan signed two agreements with Sumitomo for technical knowhow and marketing of products from its Orissa plant.
Sumitomo will not be the only Japanese investor in a West Bengal steel project. Sajjan Jindal-controlled JSW Steel was in talks with JFE, Japan, for participation in its 10-million steel plant in West Bengal. Although JFE’s investment is in the parent company, JSW Steel, the possibility of investing in the West Bengal project is not ruled out.
Steel Authority of India is also looking to partner with Kobe Steel, another Japanese steel major, for a project, which could come up at its Durgapur unit, Alloy Steel Plant.
Bhushan has been waiting a long time for land. Last year, Coal India raised objections to having industrial projects in the Asansol-Durgapur belt in the Bardhaman district, which happens to be the location of the project, on grounds that it was coal-bearing. The project has since been realigned.
We have finalised the rehabilitation package, which includes land-for-land for the displaced, Singal said. The land will be acquired by the West Bengal Industrial Development Corporation.
Bhushan Steels’ proposed Karnataka project is also at the land acquisition stage. The Sumitomo participation, however, is restricted to the West Bengal project. The state has seen some violent agitation against land acquisition, but government officials are not worried, as this is an industrial belt. People want ed the project, a Bhushan Steel official said. After Singur, the state government has been able to acquire about 6,500 acres for different industrial projects.
