ArcelorMittal SA, the world’s biggest steelmaker, said it will explore the possibility of building an auto-grade steel mill with state-run Steel Authority of India Ltd., to tap growing demand in the South Asian nation.
The two companies signed a memorandum of understanding in London Friday and plan to form a joint venture for the project, they said in joint e-mailed statement, which didn’t provide information on the proposed capacity and investment.
ArcelorMittal, which scrapped plans to build a 12 million metric ton a year project in India’s Odisha state, plans to achieve a wider footprint in India through this venture, while Steel Authority plans to boost profits by adding high-margin auto-grade steel products. Local manufacturing of such products will reduce India’s dependence on imports from companies including ArcelorMittal and South Korea’s Posco.
Steel imports into India jumped 71 percent in the year ended March 31, affecting local alloy prices.
The planned collaboration will address rising demand in India, which is projected to become the world’s fourth-largest automobile manufacturing nation by 2020, the statement said. It will also help make India a global manufacturing hub for exports to other countries, Indian Steel Secretary Rakesh Singh said in the statement.
After abandoning the Odisha project, ArcelorMittal is pursuing plans to build a factory in southern state of Karnataka. It has also bought a controlling stake in Uttam Galva Steels Ltd., which makes coated-steel products.