Weak steel market to delay Mesco-Posco Finex deal

The transfer of Finex, a technology patented by Posco, to Mesco Steel is now kept at bay because of the slow down in the steel industry. Both Posco and Mesco have mutually agreed to delay the project till the steel industry revives.

"The kind of technology they wanted to bring is too expensive and steel industries is not doing well. There is mutually agreement we will not do it for some time till the steel industry gets up", said Rita Singh, chairperson cum managing director of Mesco steel.

To facilitate the transfer of Finex technology, both Mesco and Posco had signed a memorandum of agreement in March 2015. In a statement, Mesco Steel had said Posco would have 26 per cent equity in the joint venture (JV) project.

Noted consultant Dastur & Company was roped in to study the modalities of the technology patented by Posco. Since the Finex plant requires a lot of oxygen and power, Mesco Steel has already initiated talks with some companies for setting up auxiliary plants on the JV route. The Finex plant during operation would need a running 100 Mw captive power plant (CPP) and an oxygen plant of 1000 tonne per day (tpd) capacity.

Finex process is expected to cut hot metal production cost for Mesco by Rs 2000-2500 per tonne.

Finex technology, developed exclusively by Posco, is the process to smelt iron ore without using expensive coking coal. As the process uses normal coal abundantly found in Odisha, it will reduce the cost of production for hot metal.

It was agreed upon that both Posco and Mesco would enter into a definitive pact for transfer of Finex technology. After that, the process of dismantling of Posco's Finex plant in Korea and its subsequent installation at Mesco premises would take off.

Mesco's Kalinganagar plant has a pig iron making facility of 1.2 million tonnes per annum (mtpa). It hopes to achieve steel making capacity of 3.5 mtpa in two phase. Mesco Group has taken over Maithan Ispat Ltd since 2015 which has capacity of one million tonne.