(Photo : www.jsw.in)

• JSW Steel and South Korea's POSCO have signed a preliminary agreement to establish a steel plant in India.
• The partnership also includes collaboration on battery materials for electric vehicles and renewable energy.
• POSCO previously had to abandon a $12-billion steel plant project in India due to land acquisition delays.
• The collaboration reflects the strong demand for steel in India, but past experiences highlight the challenges foreign steel companies face in the country.

In a significant development for the Indian steel industry, JSW Steel, the country's largest steelmaker by capacity, has signed a preliminary agreement with South Korea's steel major POSCO. The agreement is to establish an integrated steel plant with an initial capacity of 5 million metric tons per year. This collaboration marks a significant milestone in the steel industry, strengthening the ties between the two nations and their respective steel sectors.

The proposed steel plant is not the only area of collaboration between JSW Steel and POSCO. The two steel giants are also exploring a partnership on battery materials for electric vehicles and renewable energy for the proposed steel plant's requirements. This joint venture also entails collaboration for renewable energy for a state-of-the-art integrated steel plant and for setting up an electric vehicle (EV) ecosystem in India, as stated by Sajjan Jindal, chairman of JSW Group.

POSCO, a major player in the global steel industry, operates a cold-rolled, galvanized mill with an annual production capacity of 1.8 million metric tons in the western state of Maharashtra. This mill supplies automotive steel to India's leading automakers.

POSCO's Previous Ventures and Future Plans

However, a few years ago, POSCO had to abandon plans for what was seen as India's biggest foreign investment - a $12-billion steel plant project with an annual capacity of 12 million tons in the eastern state of Odisha. The project was stalled due to inordinate delays in land acquisition.

In 2022, POSCO also entered into a pact with Indian billionaire Gautam Adani's infrastructure group to invest about $5 billion on projects that included setting up an integrated steel mill in the western state of Gujarat. This alliance is a significant move for the diversified Adani Group, which has interests in logistics, ports, airports, mining, power generation and distribution, renewable energy, gas, and infrastructure. The group is also venturing into new-age businesses with plans for a super app and investing big in data centers.

The collaboration between JSW Steel and POSCO is a reflection of the strong demand for steel in India, which is accelerating at a faster pace than the country's GDP growth. This presents a unique opportunity for the Indian steel sector.

Challenges and Opportunities in the Indian Steel Sector

The partnership between the two steel giants is expected to leverage the technical, financial, and operational strengths of each company, according to a joint statement. However, the journey of foreign steel companies in India has not always been smooth. When the Odisha government signed the memorandum of understanding with POSCO, it made a commitment to the company to offer 4,004 acres of coastal land. The project, however, also fractured the village community, leading to clashes between pro-Posco and anti-Posco groups, claiming five lives. Police cases were lodged against many anti-Posco activists, including women, who, in their attempt to avoid arrest, lost out on their livelihoods.

In another instance, Mitsui and Ruchi group, the promoters of Ruchi Soya, created ISC in 2005. The Japanese group has a 20% stake in the company and its Indian partner holds the rest. ISC has a steel cold rolling and galvanizing plant at Bhimasar in Kutch with an annual capacity of 600,000 tonnes. However, the state government had earmarked 1,000 hectares in Tagdi village in Kutch for the project, which is currently on hold.

As Asia's fourth-largest economy, South Korea is a major player among the world's top exporting nations. Exports made up 53 percent of the Korean economy in 2011, according to the World Bank. That's one of the highest rates globally, and much more than the world's No. 2 economy, China (29 percent) and emerging-market dynamo Brazil (12 percent). South Korean exports grew 19 percent last year.