You are here: Home » Companies » News
Business Standard

Foreign steel giants learning alliance mantra

Ishita Ayan Dutt  |  Kolkata 

Steel Authority of India Ltd’s Bokaro steel unit has 32,000 acres. That is eight times the requirement of Korean giant Posco’s requirement in Orissa and twice Bokaro Steel’s current requirement, half of it unutilised. No surprises, therefore, that Posco has turned to SAIL after a five-year wait for its land in Orissa.

Steel majors—domestic and global—have realised that land is the biggest impediment to the projects, leading some global producers to forge alliances with Indian counterparts. While Posco and ArcelorMittal have first-hand experiences, other foreign steel makers have learnt from what they went through.

Neeraj Singal, managing director, Bhushan Steel, says foreign steel makers have come to realise that they need an Indian partner to understand local issues and sentiments. “It’s not just the land acquisition process. Even for the execution of the project one would have to understand these issues. In India, it’s not easy setting up a greenfield (entirely new) project of this size.”

Bhushan is in discussion with Japan’s Sumitomo Metal Industries for an equity partnership in its six-million tonne Bengal project.

Sajjan Jindal-controlled JSW Steel is collaborating with JFE Steel Corporation, the world’s sixth biggest and Japan’s second largest steel maker, for a manufacturing and shareholding agreement. Says Jayan Acharya, its director (sales and marketing), “It made sense for JFE to tie up with us.” Indeed. JSW Steel is the only steel company to bag the entire land, mines and special economic zone status, for a 10-million tonne entirely new project in West Bengal.

JFE is looking to pick up equity in it. “It’s a win-win situation. JFE comes with its technology and we have our experience in setting up greenfield projects,” says Acharya. JSW is in the process of scaling up its Bellary steel project to 10 million tonnes.

It’s not been easy for Indian steel makers either. Tata Steel has faced resistance against land acquisition in Kalinganagar, Orissa, as well as in Chhattisgarh. It remains to be seen whether the partnership with NMDC, the public sector miner, for minerals as well as integrated steel plants, makes it smoother for Tata.

NMDC had got consent from land losers for its steel project after just a day’s gram sabha. Sources say the partnership could see some realignment of projects. Both are setting up steel plants in Chhattisgarh. In Karnataka, NMDC is planning a 10-mt steel plant, while Tata Steel-promoted Tata Metaliks is eyeing a three-mt one .

ArcelorMittal gained a foothold in India last year by becoming a co-promoter in Uttam Galva Steels, even though it had signed an agreement with the Jharkhand government in 2005 for a 12-mt plant and with the Orissa government for a similar capacity one a year later. In Jharkhand, it recently changed the site following a long protest against land acquisition. In Orissa, too, it has not made much headway.

Clearly, it’s the vast stretches of land required for the mega steel plants which is standing in the way. Even mine allocation appears more achievable. At stake is the steel ministry’s target of achieving a production capacity of 115 mt of production capacity in the country by 2012, recently brought down from the earlier 124 mt. The current capacity is about half of this.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, March 23 2010. 00:46 IST