Enhancing its focus further in the US, JSW Steel has acquired Acero Junction Inc, an Ohio-based steel mill, for $81 million (about Rs 526 crore). With an annual production capacity of three million tonnes (mt), Acero has an electric arc furnace, ladle metallurgy furnace and continuous slab casting machine.
The acquisition comes close on the heels of JSW Steel announcing plans on Monday to invest $500 million (Rs 3,250 crore) in its existing plant at Baytown in Texas.
The company in a statement on Thursday said it has entered into a stock purchase agreement with JSM International, Acero Junction Holding Inc and Acero Junction Inc for acquisition of 100 per cent share of Acero Junction Holding Inc, a Delaware Corporation for a cash consideration of up to $80.85 million.
Expected to be completed in 60 days, the transaction is subject to fulfilment of condition precedents and other terms as per the stock purchase agreement, it added.
The acquisition of Acero provides an opportunity for JSW Steel to establish it presence in Ohio, US and gain deeper access to the North America market. Acero Junction had recorded a turnover of $44.27 million (Rs 286 crore) between July, 2016 and December, 2017.
Baytown plans
The planned investment of $500 million is expected to turn JSW Steel profitable in the next two years. The company will invest $150 million to modernise the existing 1 mt pipe and plate mill in the first phase which will be completed by March 2019.
In the second phase, it will set up a new melt and steel manufacturing plant with an investment of $350 million to triple the production capacity to 3 mt per annum by 2020.
The company currently imports steel slabs from India, Mexico and Brazil to process it into plates and pipes. However, the proposed new steel plant will use steel scrap as a feedstock in the electric arc furnace to produce steel slabs and cut down on imports, said Parth Jindal, Director, JSW Steel US.
JSW Steel investment is in line with the US Government move to promote 'Make in the US' and cut down on metal imports. The company recently imposed a stiff tariff on steel and aluminium imports making companies toe its line.