SAIL likely to sign joint-venture agreement with Posco in August
India Official: Expect SAIL, POSCO Pact in August. Steel Authority of India Ltd. is likely to sign a joint-venture agreement with South Korean steel major POSCO in August to set up a steel plant in the eastern town of Bokaro, India's steel secretary said Thursday. Atul Chaturvedi told Dow Jones Newswires that once the "binding pact" is signed, the Indian state-run company and POSCO will submit a detailed project report in September on setting up the plant. POSCO has been trying to get a steel plant running in India for the past five years. Its ambitious $10 billion steel project in the eastern state of Orissa has failed to get off the ground as some local people are resisting the acquisition of their land. The South Korean company is banking on SAIL's experience of running plants in the country to gain a toehold in a market where steel demand is expected to grow at more than 10% a year in the next decade. SAIL is also ready to offer 2,500 acres it owns in Bokaro for the joint venture plant. "While the exact equity pattern is being finalized, POSCO will likely hold a majority stake in the joint venture," Mr. Chaturvedi said. The two companies plan to set up a steel plant with a production capacity of 1.5 million metric tons a year, based on POSCO's patented Finex technology. The capacity could be gradually doubled. The plant will have a provision to make up to 400,000 tons a year of specialized steel products for the power sector. Mr. Chaturvedi said also that steel prices in India are likely to fall by around 1,000 rupees a ton this month, as monsoon rains, which extend from June through September, are slowing construction activity. The rains have already covered the entire country. He added that transporting steel from production centers to end-user factories has also slowed, as most rail wagons are being used to carry fertilizers. Farmers across the country are currently planting summer-sown crops such as rice and oilseeds, leading to a spurt in demand for fertilizers. by Rajesh Roy
