Breaking a prolonged deadlock, Indian government-owned Steel Authority of India Limited (SAIL) and ArcelorMittal will form a 50:50 joint venture company to implement an auto grade steel mill in India, government sources said on Wednesday, November 22.
The formal memorandum of understanding for creation of the joint venture company will be signed early next year, after India's Ministry of Steel facilitates the ironing-out of differences between the partners over equity participation in the proposed joint venture, the sources said.
Previously, SAIL has insisted on being the majority equity stakeholder in the joint venture in line with most other steel projects proposed in the country between Indian private sector steel companies and foreign steel majors, the sources added.
Since the venture will produce auto grade steel based on technology provided by ArcelorMittal, issues relating to royalties payable by the joint venture to ArcelorMittal and the pricing of raw material sourced from SAIL will be finalized over the next few months by the time the two partners are ready to sign the memorandum of understanding, the sources said.
The SAIL-ArcelorMittal venture will produce 1.5 million mt per year of auto grade steel and the mill will entail an investment estimated at $770 million and source raw material from SAIL’s Rourkela Steel Plant (RSP), located in the eastern Indian state of Odisha.