In one of the biggest foreign investments in the steel sector, Russia's mining giant Severstal on Friday inked an agreement with India's biggest iron ore miner NMDC to set up a 5-million tonne steel plant in Karnataka.
Severstal will invest nearly $1 billion in the first phase of the new proposed joint venture. The joint venture company proposes to have its captive coking coal mining subsidiary in Russia and iron-ore mining subsidiary in India, which will ensure long-term supply of the critical steel making raw materials to the proposed plant.
“The plant will have an initial capacity of 2 million tonnes annually (mtpa), which is expandable to 5 mtpa. I am confident that the formal joint venture would be put into action soon,'' NMDC Chairman and Managing Director Rana Som told reporters here after signing the memorandum of understanding (MoU) here.
NMDC and Severstal will have a 50 per cent shareholding each in the joint venture and will appoint the senior management team. “The signing of this MoU is an important strategic development for us as it will establish the steel plant in one of the most attractive growth markets in the world with India poised for 9 per cent growth. This is one of the biggest foreign investments in the steel sector in India,'' Severstal CEO Alexey Mordashov said.
Russian Ambassador to India Alexander M. Kadakin and Union Steel Minister Virbhadra Singh were present on the occasion.
On the proposed investment in the plant, Mr. Som said the exact investment requirement would be assessed within a month. The Karnataka Government had already allotted 2,500 acres to NMDC for the project, he added. Coking coal would be imported from Severstal for the joint venture, he added.
Steel Secretary P. K. Misra said this was the first joint venture in steel making between Russia and India. Severstal would share its latest steel-making technology with NMDC for the venture, which would produce auto-grade and electrical steel to meet the rising domestic demand.
The Russian firm is said to be among the top global steel ventures possessing expertise in producing specialised steel. Severstal seeks to expand to India and Southeast Asian economies to tap the growing markets. The Karnataka steel project assumes significance in the wake of rising demand for steel amidst foreign investments worth thousands of crores of rupees pending in the steel sector due to land acquisition and other problems.
