ArcelorMittal and the Steel Authority of India Limited (SAIL), signed a Memorandum of Understanding (MoU) to set up an automotive steel manufacturing facility under a Joint Venture (JV) arrangement in India, last Friday in London.
The MoU, signed by the two company Chairmen, as well as other company executives and Indian Government officials, is the first step of a process to establish a JV between both companies. The proposed JV will construct a state-of-the-art cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to India’s rapidly growing automotive sector.
India is forecast to become the world’s fourth largest automobile manufacturing nation by 2020, growing from approximately 3.5 million units today to over 7 million units. In response to the level of demand, and supported by the Indian Government’s ‘Make In India’ programme, which has been designed to transform India into a global manufacturing hub, automotive manufacturers have been establishing an increased presence in the country.
Mr. Lakshmi Mittal, Chairman and CEO, ArcelorMittal, said: “We have been in discussions with SAIL for some time and today’s signing signals our intention to further advance our collaboration. Bringing together our leading automotive technological capabilities with SAIL’s production scale in India, in a similar manner to ArcelorMittal’s partnership with Hunan Valin on our VAMA joint venture in China, is an exciting and powerful combination. The automotive sector is a highly strategic and important market for ArcelorMittal; establishing an automotive focussed production presence in India, one of the world’s fastest growing automotive markets, is a natural progression in executing our global automotive strategy.”
Mr. Chandra Shekar Verma, Chairman of SAIL, added: “SAIL is on the verge of completing a comprehensive modernisation and expansion programme to increase its hot metal capacity from 14 million tonnes per annum (MTPA) to 23.5 MTPA, with a quantum jump in production of value added steels. Furthermore, we have drawn up a Vision 2025 plan to further increase capacity to 50 MTPA. Product enrichment is an integral part of this plan and the MoU with ArcelorMittal will pave the way for a new chapter in the indigenous production of high-quality automotive steel in India. It will also aid a broader effort by SAIL to help fulfil the high-quality steel requirements of the rapidly growing infrastructure and manufacturing sectors in India.”
Commenting on the announcement, Mr. Rakesh Singh, Steel Secretary to the Government of India, said: “Increasing the availability of indigenously produced automotive steel would reduce India’s reliance on imports and provide the Indian steel industry and the automotive industry with a sustainable competitive advantage. India is expected to grow as a hub for automobile export manufacturing facilities to cater to the international market. This proposed collaboration between ArcelorMittal and SAIL is a positive and welcome step towards fulfilling the objectives of the ‘Make in India’ campaign launched by Prime Minister, Narendra Modi.”
The combination of significant growth in demand and limitations in India’s existing domestic automotive steel production capabilities has provided a compelling opportunity for both ArcelorMittal and SAIL. In the coming months, a working group with representatives from both companies will work on evaluating a structure for the proposed JV and carry out feasibility studies as part of a comprehensive due diligence process.
Photo by ArcelorMittal
