SAIL, Posco iron out differences over Rs 13,000-cr JV

Steel Authority Of India Ltd. | Steel & Iron Products | Metals & Mining | BSE: 500113 | NSE: SAIL

07 Dec 2011 Evaluate

State-run SAIL and South Korean Posco seem to have buried their differences, with the both parties showing flexibility in finalising the Rs 13,000-crore joint venture to set up a steel plant at Bokaro in Jharkhand. Steel Authority of India (SAIL) Chairman CS Verma and his Posco India counterpart Yong Won Yoon discussed various vexed issues, including the shareholding pattern of the proposed 3 MT venture with Steel Secretary PK Mishra. Though what transpired at the 40-minute long meeting was not immediately available as both parties declined to give details, according to a highly-placed source both Posco and SAIL have showed signs of flexibility which might result in an amicable solution to all the existing issues.

Shareholding of the proposed venture remained a hurdle for the venture to take off. While Posco was earlier keen on getting the management control with 51% stake, SAIL wanted to make it an even venture.Since both the parties have shown flexibility, nothing should stop the two from signing the final agreement. However, getting approval of their respective Boards and ironing out other issues might take a month from now and thus, the final agreement is unlikely to be signed before the end of the current year. SAIL and Posco have been engaged in negotiations to look at the possibilities of a joint venture to set up a three million tonne steel plant at Bokaro in Jharkhand for over a year now. The joint venture proposes to use Posco's patented finex technology. If this happens, it would the first outside Korea. Finex is an environment-friendly iron-making process where iron ore fines are directly used. As Finex technology is operational only in the Pohang plant (Korea) of Posco, they would be having full operational control of the proposed joint venture plant between SAIL and Posco.