JSW Steel to invest $500 mn in Texas to improve capacity utilisation

Sajjan Jindal-led JSW Steel will invest up to $500 million to improve the capacity utilisation of its plates and pipes mill in Texas, US.

The US arm of the company signed a memorandum of cooperation to develop and augment the steel industry in Texas with Texas’s governor on Monday. As part of the deal, Governor Greg Abbott approved a grant of $3.4 million from the Texas Enterprise Fund for JSW Steel (US).

“The memorandum gives JSW access to natural gas at economical prices and ensures abundant availability of scrap steel in Texas, making conditions conducive for manufacturing through the electric arc furnace route,” Parth Jindal, director, JSW (US), told reporters.

At present, the JSW mill’s capacity utilisation is less than 30 per cent. Jindal plans to augment it three times to take production to 1 million tonnes over the next two years. This will create 500 jobs, with average annual salaries of $65,000, said Abbott. 

This comes at a time when US President Donald Trump’s administration has imposed a 25 per cent duty on steel imports from all nations except Canada, Mexico, and Australia, in a bid to strengthen domestic industry. Sajjan Jindal had tweeted to express support for the move.

As part of the planned investment, the company will put in $150 million to augment the unit’s capabilities. This capex programme is expected to be completed by March 2020. The rest of the investment will be used to set up a hot-end facility to make steel “melt and manufacture”. This is subject to approvals.

Sajjan Jindal had bought the mill in the US for $1.2 billion in 2007. The facility has had a tough journey since then because of the global financial crisis of 2008. Steel used for the plant was imported from Mexico, Brazil, and India. 

“We are working with the government, seeking exemption... (from import duty) for this project,” said Parth Jindal, adding: “The idea is to consolidate this facility to bring steel manufacturing back to the US.”

He added that the increased production would cater for Mexico and Latin America.

Abbott said the US government did not plan to shut down imports completely, despite the new tariffs on steel and aluminium. 

JSW’s Baytown firm, located about 48 km from Houston, is one of the biggest steel plate and pipe mills in North America. It services the needs of energy, petrochemicals, defence and other heavy equipment industries with a demand for high-quality carbon plates.