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South Korean giant evaluates options for integrated steel plant project worth $12 billion.
South Korean steel giant Posco has set its sights on a return to the eastern Indian state of Odisha, with a massive investment worth $12 billion to set up an integrated steel plant – marking one of the biggest foreign direct investments in India yet.
The plan – first outlined by South Korean Ambassador to India Shin Bongkil – would mark one of the single-largest FDIs in India.
Participating in a roundtable on ‘South Korea and Odisha: Promoting Bilateral Business Opportunities’ organised by the Indian Chamber of Commerce (ICC) in association with Industrial Promotion and Invest Corporation of Odisha Ltd (IPICOL), Bongkil said 66 new Korean companies have entered India in the past one year – even during the pandemic – making an investment of $17 million in 2020.
Apart from steel, Korean companies were keen to work in the areas of renewable energy, water treatment and smart city projects, said Young Seaon Park, Director of Korea Trade-Investment Promotion Agency, adding that focused meetings will be organised in September for exploring opportunities in smart city projects.
In 2017, Posco had scrapped its greenfield steel plant project near Paradip in Odisha for a 12-MTPA (million tonnes per annum) steel plant, as it did not get a firm commitment from the state government to get captive mines for the proposed plant following changes in the Mines and Minerals (Development and Regulations) Act, 1957.
However, Dibya Shankar Mishra, state minister for industries and MSME, said Odisha and Korea had identified several possibilities to collaborate across the focus sectors of the state, adding that Odisha was in the process of implementing its Vision 2030 strategy document, which aims to ensure that 50 per cent of the primary metals produced in the state is value added in the state.
The forward movement in the state’s steel and mining sector comes a month after ArcelorMittal – the world’s largest steel company – signed a memorandum of understanding with the state government to build an integrated steel complex in Kendrapara district with a capacity of 12 MTPA.
Odisha has always attracted interest among steelmakers as it is home to about one-third of India’s reserves of iron ore. While steelmakers in public and private sectors have a significant presence in Odisha, the Indian and state governments have recently adopted a slew of measures to help foreign companies re-establish a major manufacturing footprint in the state.
Last year, at a meeting facilitated by the Indian Ministry of Steel, it was agreed that a joint working group would be formed to implement a memorandum of understanding between Posco and Rashtriya Ispat Nigam (RINL) at Vishakhapatnam. Though exploratory talks with the public sector steel firm had been going on, it picked up pace even despite the pandemic.
“We are studying how to participate in a fast-growing market like India. This year, steel demand has dropped, but we expect a recovery next year. By 2030, India could have a capacity of 200 million tonnes (mt),” Posco India Managing Director Sung Lae Chun, said in an interview last year.
According to the World Steel Association, India faced an 18 per cent decline in steel demand in 2020, but it is set to rebound by 15 per cent this year. Like Arcelor-Mittal and other manufacturing giants, India’s long-term growth story is what prompted Posco to review its India options. “Even in the past, Posco was looking at investing in India. We had looked at setting up a plant in Odisha, but that did not happen. India's market is very big, so global steelmakers like Posco are exploring opportunities here,” Chun said.