POSCO’s integrated steelwork project is likely to become the largest foreign investment in India
POSCO, the world’s fourth largest steel producer, established its Indian subsidiary, POSCO-India Private Limited, in August 2005 in Orissa. The establishment was based on an MOU with the Government of Orissa in June 2005, to set up a 12 MTPA green field steel plant near Paradip, in the Jagatsinghpur District of Orissa, with an investment of 12 billion dollars.
The company will build a steel plant with a production capacity of four million tons a year. The first phase of construction is expected to be completed in December 2011, with the following three phases lasting three years each. The project will include iron ore mine development for 30 years at captive mines located in the Keonjhar and Sundergarh districts of Orissa, with a production capacity of two million tons a year. The total size is expected to be 4,004 acres, consisting of 89% national land and 11% privately owned land. 30% of the national land is an area designated as a forest and the company has asked the Indian government to re-designate it as industrial land. The company expects to receive approval in November of this year.
The project is aligned with iron ore mines and a 289-km railroad to connect local infrastructure. The project alone is expected to produce direct employment of 13,000 people and indirect employment of an additional 35,000. This integrated steel plant project is one of the company’s foremost investment strategies to strengthen its global competitiveness and business in China. Once the project is completed, it is estimated that it will constitute the largest foreign investment in India and the world’s largest steel plant.
In addition, the company currently runs about 40 steel processing centers in 12 countries, supplying steel materials based on the requests of each unique customer. In India, there are four processing centers with a yearly production capacity of 820 thousand tons; these are the Telegaon Industrial Complex near Mumbai, the Bawal Industrial Complex near Delhi, and the Irungattakottai Industrial Complex in Tamil Nadu, and the Dighi Port of Maharashtra. While the first three of these sites were established between 1998 and 2007, the one in the Maharashtra is expected to be completed in December 2009.
In Maharashtra, a rising automobile industry hub, POSCO aims to build a continuous galvanizing line so as to enter into the local Indian automobile market. Its production capacity is expected to be 450 thousand tons per year. Construction began in September 2010 and is expected to be completed in May 2015. This is primarily aimed at fulfilling India’s domestic demand with 95% of the production and export with 5%. The company expects production will consist of 320 thousand tons of automobile materials and 130 thousand tons of home electronics materials.
India, along with China, is a significant opportunity for POSCO. Not only is India the world’s fastest growing nation, but it also has vast human resources, rich natural resources, and is friendly to foreign investment. POSCO’s investment in India was discussed at the Korea-India Summit Talk in 2005 and the establishment of a subsidiary and the subsequent investment are a result of these discussions and policies of both governments.
The steel industry is also a source of economic development and is actively promoted by the Indian government. As this involves a combination of the advanced steelwork technologies of POSCO and the vast opportunities provided by India, the integrated steel plant project is likely to become the greatest investment in India, the significance of which deserves attention.