South Korea’s largest steelmaker POSCO Group has agreed with JSW Steel Ltd. to build an integrated steel mill with an annual capacity of 6 million tons in India, expanding an earlier plan as the South Asian nation’s steel demand continues to surge.
The agreement marks a 20% increase from the 5 million tons originally outlined in a memorandum of understanding signed by the two steel giants last October.
Under the new heads of agreement, the companies have identified the eastern state of Odisha – home to rich coal and iron ore deposits – as a potential site for the plant, POSCO Holdings Inc., the parent of the world’s seventh-largest steelmaker POSCO, said Monday. A feasibility study will be conducted before a final decision is made.
The steelmaking joint venture will be owned equally by POSCO and JSW, India’s No. 1 steelmaker.
Both companies said they intend to accelerate the project to gain an edge in India, where steel consumption has expanded 9% to 10% annually in the past three years and is forecast to more than triple to 400 million tons by 2047 from 120 million tons in 2023, according to World Steel Dynamics.
Demand for automotive steel plates surged in the country on growing vehicle production while increasing projects for infrastructure such as roads and ports ramped up reinforcing bar demand.
STRATEGIC PUSH ABROAD
The JV plan underscores POSCO’s strategy to boost investment and expand capacity in overseas markets, particularly in India and North America, as it seeks to capture growth outside its home market.
POSCO already operates integrated steel plants in South Korea, China, Vietnam and Indonesia, using local bases to cut logistics costs and improve profitability.
The Korean steelmaking group currently operates a rolling mill in Maharashtra to produce cold-rolled steel sheets for automakers such as India’s No. 1 car seller Maruti Suzuki India Ltd., Hyundai Motor Co. and Kia Corp.
The new facility would be its first full-scale integrated steel plant in India.
An integrated mill is a single-site facility that produces steel from start to finish, from smelting iron ore in blast furnaces to refining, casting and rolling it into finished products.
The latest Odisha project marks POSCO’s second attempt to build an integrated mill in the country. In 2005, the Korean steelmaker unveiled a $12 billion investment plan but abandoned it in 2017 after strong local opposition.
In 2022, POSCO signed an agreement with India’s Adani Group to build a similar facility but later shifted to JSW to improve the project’s chances of success.
COMPETITION WITH CHINA
Industry officials said the new Indian plant would help POSCO sharpen its competitiveness against Chinese rivals that have eroded margins in global steel markets.
POSCO Holdings Chairman Chang In-hwa has been actively seeking to build a new overseas integrated steel plant to restore the group’s steel business.
He has been promoting ideas of upping investments in countries such as the US, India and Indonesia, where steel demand is growing.
Earlier this year, POSCO announced a plan to jointly invest in an integrated steel plant with electric arc furnaces in the US that will be built by Hyundai Steel Co.
By Woo-Sub Kim
duter@hankyung.com
Sookyung Seo edited this article.
