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South Korea's POSCO Group and India's largest private steel company, JSW Group, signed a non-binding framework agreement (HOA) last week, injecting new momentum into the full-process joint venture steel plant project in India announced by the two parties in October last year.
The agreement confirms that both parties will each hold a 50% stake in the joint venture (consistent with the investment ratio announced in October last year), NM400 steel but the initial crude steel production capacity of the proposed steel plant will be increased from the previously announced 5 million tons/year to 6 million tons/year.
Following the signing of the agreement on August 18, the two parties issued a joint statement stating, "Next, POSCO and JSW will conduct a detailed feasibility study to finalize the plant's location, investment terms, resource availability, and other key factors." While not legally binding, the agreement provides for exclusive negotiating rights and formalizes commercial confidentiality.
According to Mysteel Global, the two companies signed a memorandum of understanding (MoU) on October 21 of last year for collaboration covering areas such as steel, rechargeable battery materials, and renewable energy.
However, the construction and commissioning schedule for the new plant, the technologies to be used, NM400 steel and the main product categories have not yet been disclosed. Although Indian and South Korean media have reported that Odisha in eastern India has been officially selected as the site, the latest statement from both parties stated only that "Odisha was one of the key locations considered for the project due to its natural resource endowments and logistical advantages."
It is reported that POSCO planned to build a full-process steel plant in Odisha as early as 2005, but suffered repeated setbacks due to issues such as land acquisition and finally abandoned the plan completely in 2017.
Posco already has some industrial presence in India: a cold-rolling and galvanizing plant in Maharashtra with an annual capacity of 1.8 million tons (commensurate with the current production capacity) that began operations in June 2014, along with steel processing plants in New Delhi, Gujarat, Tamil Nadu, and Andhra Pradesh. According to South Korean commentators, once the new plant is completed, it will not only be Posco's largest plant in India, but also its largest overseas steel plant globally.
Business Korea magazine commented that advancing the Indian project is in line with POSCO's recent strategic direction. "Since Chang In-hwa took over as chairman of POSCO last year, the company has been implementing strategic investments both domestically and internationally to rebuild its steel competitiveness. NM400 steel Overseas, POSCO is expanding upstream investment and pursuing a localization strategy to capture high-growth, high-profit markets such as India and North America."
For example, in April this year, POSCO signed a memorandum of understanding with Hyundai Steel, another South Korean full-process steelmaker, to jointly build an electric arc furnace steel plant in Louisiana, USA, with an expected annual production capacity of 2.7 million tons and scheduled to start production in 2029. POSCO said this would establish a "bridgehead" for its entry into the North American steel market.
In addition, in early August, POSCO also joined a merger and acquisition consortium composed of international steel companies, led by Australian coated products manufacturer BlueScope Steel, aiming to bid for the financially troubled Whyalla Steel in South Australia. According to reports, in addition to BlueScope and POSCO, the consortium also includes Japan's Nippon Steel and India's JSW Steel.
"Despite the difficult internal and external operating environment, we will continue to turn crises into opportunities by strengthening the basic competitiveness of our core businesses." - Business Korea quoted a POSCO executive as saying about the company's strategy.
