The $1 billion joint venture of state-owned Steel Authority of India and ArcelorMittal is likely to be a private company with both partners holding equal stakes.
Sources close to the development said the equity structure was likely to be finalised once the joint venture agreement was signed.
The unit would come up in Gujarat or Maharashtra, said a source who did not want to be named. Since the unit will manufacture automotive steel, the Pune-Chakan belt in Maharashtra and Sanand in Gujarat are among the sites being considered.
The venture will sign a long-term purchase agreement with SAIL's Rourkela plant for sourcing hot rolled steel strips. SAIL's 3 million tonne Rourkela hot strip plant is under construction.
ArcelorMittal is the world's largest steel producer, shipping over 13 million tonnes to automotive customers in 2014. The automotive industry accounts for 16 per cent of European steel consumption.
The number of automobiles in India is expected to grow from 3.5 million to 7 million in 10 years. India is forecast to become the world's third-largest automobile manufacturing nation by 2026.
ArcelorMittal and SAIL had signed a memorandum of understanding in May 2015 to explore the possibility of setting up an automotive steel manufacturing facility. A working group has completed the major part of the project's feasibility report. A review meeting held in London recently was attended by Union Minister of Steel Chaudhary Birender Singh.
The venture is on the lines of a similar one between Tata Steel and Nippon Steel & Sumitomo Metal Corporation. Jamshedpur Continuous Annealing & Processing Company, housed within Tata Steel's Jamshedpur works, has an annual capacity of 600,000 tonnes of automotive steel. The Tatas have 42 per cent share of the domestic automotive steel market.
JSW Steel, the country's largest steel producer, has a similar tie-up with JFE Steel Corp of Japan for automotive steel at its Vijayanagar plant.
$1-BILLION JOINT VENTURE
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The venture will sign a long-term purchase agreement with SAIL’s Rourkela plant for sourcing hot rolled steel strips
