South Korea’s steel major POSCO has shelved its plan to build a steel mill complex in Eastern Indian state of Orissa as part of its restructuring scheme due to weaker earnings.
On July 15, POSCO Chairman Kwon Oh-joon announced the decision as part of the plan to scrap the group’s unprofitable businesses abroad.
Rated as the world’s fourth-largest steel mill, Posco had planned to invest US$12 billion in phases to build a 12 million tonne a year steel complex in Orissa.
POSCO had signed a contract with the Orissa State government in 2005 for setting up the steel complex.
The South Korean group had also secured rights to develop iron ore mines near the site of the mill.
But POSCO has not been able to make much progress on the project especially due to opposition from environment groups and residents in the area. The project’s progress was also affected by India’s bureaucratic red tape.
“The company is not in a position at the moment to finance large-scale overseas investment schemes,” a POSCO spokesman said, indicating that it will not push ahead with the Orissa project at least for the time being.
“But this doesn’t mean that we have completely given up building a steel mill in Eastern India,” the Korea Times quoted the spokesman as saying.
“When the conditions are right, we will definitely restart the project. For now, we will focus on producing automotive steel plates and other value-added goods for automakers and other manufacturers operating in India,” the spokesman assured.
POSCO’s restructuring means, it would focus on building more plants processing making automotive steel plates and other high value-added steel products.
POSCO operates three processing plants in Western India, producing automotive and electrical steel sheets.
In January, POSCO opened its third plant in Maharashtra Province, about 120 kilometers from Mumbai. The facility is capable of producing 1.8 million tons of automotive steel plates annually for General Motors and other global automakers operating factories nearby.
In 2012, the company opened its first Indian plant capable of producing 450,000 tons of galvanized steel plates annually, and a second — with an annual capacity of 300,000 tons of electrical steel sheets — in 2013. Both plants are located in Maharashtra Province. POSCO plans to open another steel processing plant in early 2015.
POSCO imports hot-rolled steel sheets from its Korean and Indonesian mills for processing at the Indian plants, catering to automakers and other manufacturers need.
fii-news.com
