World’s largest steel maker ArcelorMittal and the Steel Authority of India Limited (SAIL) have zeroed in on Andhra Pradesh to set up their Rs 15,000 crore joint venture.
The official announcement, expected to be made in the coming few days, will produce high-end steel, primarily for the automobile industry. According to Union Steel Minister Chaudhary Birender Singh, AP was favoured over Gujarat because of its east coast advantage. With almost all the formalities completed between ArcelorMittal and SAIL, signing of the joint venture agreement is a matter of days, the minister said.
His disclosure came during the diamond jubilee celebrations of National Mineral Development Corporation (NMDC), the country’s largest iron ore producer, on Friday in Hyderabad.
It is not known where the giant plant will be located. But the minister’s hint at east coast advantage gives rise to speculation that it will be in the proximity of Bay of Bengal. That is between Kakinada and Vizag. This area is well linked to mineral-rich Orissa state. Import of raw materials from the neighbouring state will be cost-effective and export of finished products from the ports on eastern coast will be an advantage.
Another region that is being speculated is Chittoor district. Sri City is fast emerging as an industrial hub. Spread over 7,000 acres, it has more than 100 industrial units, half of them multinationals, manufacturing various products, including auto components. Its proximity to Tamil Nadu and its ports and Karnataka has made it a hot destination for investors from Japan and South Korea. Isuzu is already building a plant in Sri City and Hero MotoCorp is investing Rs 2200 crores in a new facility there. Chief Minister Chandrababu Naidu’s recent visit to South Korea to woo industrialists is expected to bring in massive investment. One of the biggies, Kia Motors, has confirmed to invest about Rs 5000 crores in ancillary units.
The JV is purpose-specific with long-term plans. With almost all major global automobile manufacturers with their presence in India, and a well-developed domestic auto industry, the country seeks to become a major motor vehicle producing base in the world.
The proposed JV is expected to have an initial annual manufacturing capacity of 1.5 million tonnes of high grade steel required for the automobile industry. Once the special steel starts rolling out, it will boost the auto industry and hundreds of ancillary units supplying components. India is eyeing a 28 per cent share in global car market in the coming years. Viewed against this background, ArcelorMittal-SAIL venture fits these ambitious plans. They signed a Memorandum of Understanding in May 2015 and it took almost two years to ready the blueprint.
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