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| Is Mukand still building Kobe-SAIL's JV plant in India? |
| Shubhashish / Mumbai Jan 31, 2012, 14:49 IST |
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In 2007, Kobe Steel, Japan and Mukand Ltd, signed an agreement which stated that all plants based on Kobe's exclusive ITmk3 technology, in India, will be built by Mukand Ltd. Five years hence, Kobe and SAIL are set to finalise the joint venture to build India's first plant on the technology. However, whether Mukand Ltd will be partnering Kobe in building the plant remains a question.
According to the agreement signed in 2007, for the first plant on the ITmk3 technology, Kobe Steel would be the principal contractor and Mukand would be a sub-contractor. When asked asked Kobe's JV with SAIL to set up a plant on the said technology in Durgapur, Mukand said, "Kobe Steel & SAIL have signed a Joint Venture agreement, Mukand is fully aware of this. Participation as a licensee shall come up at the time of setting up of the plant and whether it is the first plant in India or not." This indeed is the first plant in India based on the given technology. As a matter of fact, this is the second only plant in the world based on the ITmk3 technology.
The year 2007 was a landmark year of sorts for Kobe Steel. The company apart from the agreement with Mukand in India, signed a couple of international deals as well. Kobe Steel and Steel Dynamics, agreed to construct an iron-making plant using Kobe Steel's ITmk3 Process in Minnesota (USA). Total investment is in the vicinity of $250 million. The plant, with an annual capacity of 5 lakh tonne started production recently.
Kobe also formed an alliance with Cleveland-Cliffs Inc to market the ITmk3 technology. "The agreement, which has a 10-year term, enables the two companies to collaborate in commercializing the ITmk3 Process," it had said. It was a non exclusive license to use the ITmk3 process and was able to freely promote ITmk3 projects mainly in the United States, Canada, Brazil and Australia. "Kobe Steel will provide technical support for project promotion and development," it had further said.
According to Kobe, the ITmk3 Process, with its lower carbon-dioxide emissions and capital investment, is highly suitable for developing countries that are growing their steel industries. In addition, the ITmk3 Process can use relatively low-grade iron ore and coal, which are difficult to use in blast furnace ironmaking, to keep raw material costs down.
Mining companies traditionally supply raw materials to integrated blast-furnace steelmakers. However, the ITmk3 Process enables mining companies to produce and sell value-added iron nuggets to electric arc furnace steelmakers. Along with these advantages, the real value of the ITmk3 Process is that it produces high-grade iron nuggets comparable in quality to blast-furnace pig iron.
Mukand said that the licence agreement to build the plant in India still holds and the company has the engineering know how, the project management skills and specialized manufacturing facilities to build such a plant.
However, Kobe Steel declined to comment on the status of the agreement with Mukand.
According to Mukand, the license agreement clearly stipulates that the scope of work between Kobe Steel and Mukand Ltd will be decided on project to project basis. "Initially it will be parts of the plant and gradually the scope of Mukand will increase as we do more and more projects," the company said.
Mukand Ltd is a Mumbai-headquartered steelmaker with presence in turnkey projects and carries out projects from concept to execution. The company says it has specialisation in buildings plants varying from steel, copper, aluminium, cement and power sectors. The company is also present in the infrastructure space and is executing two highway projects funded by the World Bank.
The company has two steel plants in India, each in Kalve, near Mumbai and Hospet, Karnataka.
On December 28, 2011, SAIL and Kobe agreed to establish a JV company to carry out the detailed feasibility study for a commercial ITmk3 iron-making plant in India. The 50:50 JV has been named SAIL-Kobe Iron India Pvt Ltd for the moment.
The two companies have been jointly working on a preliminary study to utilize the ITmk3 process since signing a memorandum of understanding in March 2010.
With a capacity to produce 500,000 tonne of iron nuggets per year, the plant would be constructed at SAIL's Alloy Steels Plant in Durgapur in West Bengal. The project would use iron ore from SAIL's mines. The two expect plant construction to commence in 2013 go into operation in 2015.
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