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ArcelorMittal and Steel Authority of India Ltd have signed a memorandum of understanding (MoU) on Friday in London to set up an automotive steel manufacturing facility through a joint venture in India.
“The MoU is the first step in the process to establish a joint venture between the two companies.
“The proposed joint venture will construct a cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to the automotive sector,” the two companies said in a statement.
The MoU was signed by Lakshmi Mittal, Chairman and Chief Executive Officer, ArcelorMittal, and CS Verma, Chairman, SAIL.
“We have been in discussions with SAIL for some time and the signing signals our intention to further advance our collaboration.
“The automotive sector is a highly strategic and important market for ArcelorMittal.
“Establishing an automotive focussed production presence in India is a natural progression in executing our global automotive strategy,” said Mittal.
India is forecast to become the world’s fourth largest automobile manufacturing nation by 2020, growing from approximately 3.5 million units today to over 7 million units, the two companies said in a statement.
CS Verma said product enrichment is an integral part of SAIL’s modernisation and expansion plan.
“The MoU with ArcelorMittal will aid a broader effort by SAIL to help fulfil the high-quality steel requirements of the rapidly growing infrastructure and manufacturing sectors in India,” he said.
The two companies will now set up a working group with representatives from both companies to work on evaluating a structure for the proposed joint venture and carry out feasibility studies as part of a comprehensive due-diligence process.
ArcelorMittal has a market share of approximately 17 per cent in the global automotive steel sector.
In 2014, the company shipped over 13 million tonnes of steel to automotive customers globally, resulting in revenues of over $12 billion.
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