With a target to make a global footprint,state-run behemoth Steel Authority of India Limited (SAIL) has initiated talks with its counterparts in South Africa and Indonesia to set up plants with a 3 million tonne per annum capacity in each of the two countries. The two projects entail an investment of nearly Rs 24,000 crore. Following the recent visit by a high-level team of ministry officials,the South African government has agreed to expedite the process of signing a Memorandum of Understanding (MoU) with SAIL for facilitating a plant,while the Indonesian government has expressed its desire that SAIL set up a 3 mt plant in the country. I am for the PSU going global. Negotiations with the countries are at various stages. This is imperative as we are seeking assured raw material security iron ore and coking coal, steel minister Virbhadra Singh told The Indian Express. The ministry would seek the cabinet approval after SAIL thrashes out the modalities,the minister said. Singhs plan to push PSUs into foreign shores makes sense with the International Coal Ventures Limited (ICVL),an umbrella organisation of leading mineral and metal PSUs,not been able to make any headway. Chinese companies,on the other hand,are steadily expanding their bases abroad to secure fuel to fire their blast furnaces back home. SAIL desperately needs to tie up raw material assets,given its plans to ramp up production capacity to 26.2 million tonnes a year from 14 mt now. Apart from talks with these nations,a high-level delegation from Mongolia,led by the countrys speaker of Parliament also came and expressed desire that SAIL set up a unit there. Let us see, Singh said. The minister pointed out that these two nations were banking on SAILs expertise in running and managing the economics of a steel plant. In the course of impending negotiations,the equity structure and pattern of the South African and Indonesian projects will be decided by SAIL. Prices of coking coal,a crucial input in producing steel shot up by over 86 per cent in the third quarter from a year earlier,which hit the PSUs profit margins by over 32 per cent. SAIL imported about 70 per cent of its coking coal mostly from Australia. SAILs motivation is understandable at a time when there is a scramble for raw material assets in India and all foreign investors have made it clear that they were reluctant to set up plants unless their captive mines are allocated. ArcelorMittal has already bagged a mineral concession in Jharkhands Karampada mines,in SAILs backyard. Other major steels like Essar and Tata have too have gone global.
