The Indian government will woo foreign steel companies like POSCO and ArcelorMittal, whose own projects have run into difficulties in the country, to participate in the planned special purpose vehicles (SPVs) to set up mega steel mills, an official at India’s Ministry of Steel said on Friday, July 10.
Many of the global steel major had announced projects in India but had run into problems either in sourcing raw materials or land acquisition and these issues will automatically be resolved if they participate in the SPVs comprising Indian steel and mining companies, the official said.
Citing the example of the collaboration between ArcelorMittal and Steel Authority of India Limited (SAIL) to set up an auto grade steel mill, the steel ministry official said that, since global companies are already keen on marking their presence in India, teaming up with the proposed SPVs would only benefit the latter in fast tracking projects.
In 2013, ArcelorMittal scrapped plans for a 12 million metric ton per year steel mill in the eastern Indian state of Orissa and a similar steel mill in Karnataka, citing delays in securing approvals and land acquisition. Similarly, POSCO’s project for a 12 million metric ton per year steel mill also in Orissa has failed to progress due to failure to secure captive iron ore resources.
The Indian government has already announced plans for constructing ultra mega steel plants (UMSPs) in the iron ore-rich states of Chattisgarh, Jharkhand, Orissa and Karnataka through SPVs.
Each of these steel mills of 10 million ton per year capacity with investment of $7.8 billion each would be implemented by four SPVs lead by Indian government owned and managed companies like SAIL, Rasthtriya Ispat Nigam Limited (RINL), iron ore miner NMDC Limited and mining companies such as Orissa Mining Corporation (OMC).
Since most of these government steel and mining companies already have access to raw materials and land, foreign steel companies would be expected to find it easier to implement projects via the SPV route.