SAIL-Posco differences over Bokaro plant likely to be resolved
03 Nov 2011
In an effort to break the deadlock between Steel Authority of India Ltd (SAIL) and Korean steelmaker Posco over their proposed joint venture for a 3-million tonne (mt) per annum steel plant at Bokaro in Jharkhand, the government has proposed that the two entities make it an equal joint venture, with each taking 50 per cent of the equity.
Reports suggest that Posco may agree to the deal, which is likely to be signed during steel minister Beni Prasad Verma's visit to South Korea next week. Posco has so far been insisting on a majority stake of at least 51 per cent in the Rs17,000 crore joint venture, since it will be bringing in its patented Finex technology that uses non-coking (low grade) coal.
Verma has gone so far as to say he will cancel his visit if Posco doesn't agree to the new proposal. ''Our talks have been on and only a few points remain to be agreed to,'' steel minister Beni Prasad Verma told reporters at a press conference in New Delhi on Wednesday. ''We have proposed that stake-holding can be 50:50.''
He said the Indian government has agreed to give the proposed joint venture iron ore at a 10 per cent discount, which Posco has agreed to, although it had earlier sought a 20 per cent discount that was sought.
Another difference is over state-owned SAIL's demand of first right of refusal for any future agreements with the Korean steelmaker, which Posco has so far not been willing to grant.
Verma, scheduled to leave for South Korea on Friday, said he hopes to sign the joint venture agreement on 8 November if Posco accepts the arrangement. ''If they (Posco) do not agree, I will cancel my visit,'' he said.
