India’s Ministry of Steel has commenced discussions at the highest level of government on a $2 billion long-term revival plan for state-run steel producer Rashtriya Ispat Nigam Limited, government officials said on Friday, January 3.
The first round of discussions has already been done by the Ministry of Steel with the Prime Minister’s Office (PMO) in presence of finance ministry officials.
These talks are being taken as an indication that the government is likely to abandon the complete privatisation of RINL, as planned earlier to revive the company.
In an official statement, the steel ministry stated, “The Prime Minister, through the PMO, reaffirmed that a strong and self-reliant steel sector is vital to achieving India's long-term developmental goals. RINL's revival will bolster India's manufacturing requirements, reduce dependence on imports, and play a pivotal role in fulfilling the demand from the infrastructure sector.”
The final contours of the revival package for RINL which operates a 7.3 million mt per year capacity steel mill at the southern port town of Vishakhapatnam are yet to be firmed up and would need further rounds of inter-ministerial consultations.
However, sources said that some of the funds likely to be earmarked to revive the steel mill would be utilised to deleverage the company which is saddled with $4.16 billion in outstanding debt liabilities.
At the same time, a number of other options are also on the table to ensure the long-term viability of RINL, including a modernisation program which would entail replacing the three blast furnaces with electric arc furnaces (EAFs) which could entail investments to the tune of $353 million.
The ministry is also working on options to attract a technology partner from Japan to expand RINL’s capabilities in the production of specialty, automotive and construction steel products.
At least seven Japanese steel companies as well as South Korea’s POSCO have shown interest in investing in RINL and these companies will be tapped to become the latter’s technology collaborators, the sources said.
