JSW in joint venture for a green field $42 million steel plant in Georgia

Mumbai: The second-largest private sector steel maker in India, JSW Steel has announced that it will set up a green field project in Georgia, formerly a part of the Soviet Union.

The project, set up at an investment of $42 million by way of equity and debt, is part of a joint venture partnership between JSW and the UK's Geo Steel. Once the plant is operational next year, it will produce bars that are used in building construction.

In a statement during its 14th annual general meeting, the company said that JSW Steel would hold a 49-per cent stake in the venture, with the majority 51 per cent being held by Geo Steel.

Both companies will invest $7 million each, in terms of direct equity, with the remaining $28 million being raised by way of debt. Of this, half the debt would be provided by the European Bank for Reconstruction and Development (EBRD).

The plant will have a capacity of 175,000 tons annually, and is scheduled to be commissioned later this year. It will produce what are known as ''rebars'' in common parlance, which are commonly used in reinforced concrete and masonry structures, and are usually made from carbon steel. The bars are given ridges for better frictional adhesion with concrete.

Growing economies in Eastern Europe are driving the consumption of steel, and industry sources say demand from Russia is projected to increase by 65 per cent by 2015, given the growth in construction and auto sectors.
 
Seshagiri Rao, director of finance at JSW Steel said that the plant would start generating revenues by 2009-10, and he estimated the market for such products at 500,000 tons per annum in Georgia.

Additionally, the company also said that it would invest a maximum of Rs14,000 crore as capital expenditure by 2010. Of this, around Rs5,800 crore is scheduled for this year, in a mix of debt and equity. Over the last year and half, the company has put in Rs10,500 crore, it said.

JSW Steel also said that it is on track to achieve its production target of 7.8 million tons per annum by September-October 2008, and by 2020 it would produce 32 million tons of steel per annum.

At present, JSW produces 4.2 million tons per year. To supplement its production plans, JSW Steel is looking at mine acquisitions in India and abroad to ensure an uninterrupted stream of raw materials such as iron ore and coal, and has applied for a mining lease in Jharkhand's Ankua region.

JSW Steel earlier acquired a 70 per cent stake in a Chile mining company, Santa Fe Mining, which also owns mines that will be developed over the coming three year period to produce 20 million tons per annum.

In a corporate filing with the Bombay Stock Exchange (BSE), JSW Steel said that it has made changes to the Company's Directorate, and has nominated V Madhu, as the Nominee Director of Karnataka State Industrial Investment and Development Corporation Ltd (KSIIDC), replacing Sobha Nambisan. It has also appointed K Vijayaraghavan and Ajay Shah as additional directors on the board of directors of the company effective 16 June, 2008.