India's JSW forges alliance with Japan’s JFE

JSW forges alliance with Japan’s JFE. JSW Steel Ltd and JFE Steel Corp., the second largest steel makers in India and Japan, signed a comprehensive deal that will begin with a collaboration to produce automotive steel and then expand to activities such as setting up new steel plants and the acquisition of iron ore and steel mines in and outside India. The deal will allow JSW to move into the high-margin business of producing steel for car makers while it offers JFE entry into the fast growing Indian economy. “We will supply automotive steel to India’s domestic companies like Suzuki, Toyota, Honda and Hyundai,” Hajime Bada, chief executive officer of JFE Steel said in Mumbai on Thursday. “Globally these are customers of JFE Steel.” The two steel companies will also collaborate to build JSW’s greenfield steel project in West Bengal that will produce 10 million tonnes (mt) of steel. It plans to set up another 10 mt steel plant in Jharkhand. JFE has annual steel-making capacity four times larger than JSW’s current 7.8 mt. Also on the agenda: “mutual stock holding” which means both the companies could buy stakes in each other. Japan’s Nikkei newspaper reported on Thursday that the Japanese partner may pay as much as 50 billion yen (Rs2,600 crore) for a stake in the Indian steel maker. “Under the umbrella agreement we have created a task force with representatives from both the companies to work out areas for collaboration” Sajjan Jindal, vice-chairman and managing director of JSW, said after announcing the agreement.“Everything is still at the discussion stage. Mutual shareholding is a part of the discussions, but what percentage, when and how will depend on the time. India is a big market for high-quality steel as far as auto is concerned and we will take advantage of (JFE’s) experience in producing high quality auto steel.” This is the third multinational steel company to enter India, after Sumitomo Metal Industries Ltd tied up with Bhushan Steel Ltd to make high grade steel, and in September world’s largest steel maker ArcelorMittal announced its decision to acquire 35% stake in 800,000 tonnes Uttam Galva Steels Ltd.