ArcelorMittal`s prolonged bid to buy debt-ridden Essar Steel is delaying the world`s biggest steelmaker`s joint venture with state-owned Steel Authority of India Ltd (SAIL), India`s steel minister and SAIL`s chairman said.
India`s biggest state-owned steel company SAIL and billionaire Lakshmi Mittal-controlled ArcelorMittal signed a deal in May 2015 to set up a steel plant to produce automotive grade steel. However, no timetable has ever been set out.
ArcelorMittal has been engaged in a drawn out attempt to acquire Essar Steel since 2017. Its 420 billion rupees ($5.9 billion) bid for the bankrupt Indian steelmaker has been mired in legal wrangling for months.
India`s steel minister said that was delaying the joint venture.
"It will take a few years for the plant to be built. Both the companies are ready to sign definitive agreements, but ArcelorMittal is busy with the Essar Steel acquisition," Chaudhary Birender Singh, India`s steel minister told Reuters after a steel seminar in Mumbai on Tuesday.
The delay hurts SAIL`s plan to enter a high premium and fast growing market where India`s private steel majors Tata Steel Ltd and JSW Steel Ltd have already made inroads. A large part of India`s automotive steel demand is currently met via imports from South Korea and Japan.
JSW Steel and Tata Steel are both jostling for a portion of the automotive steel market where demand is growing 10 percent annually, according to analysts.
"Both parties are committed. We want to sign the definitive agreement soon," Anil Kumar Chaudhary, SAIL`s chairman told Reuters, on Wednesday. "ArcelorMittal people are slightly tied up in the Essar acquisition currently," he added.
A spokesperson for ArcelorMittal said the joint venture remains "strategically important."
"Both parties remain in discussions and continue to progress the project," the spokesperson said in a statement.
The delay comes at a time when the steel ministry has put pressure on automakers in India to use locally made steel and has refused to back down https://www.reuters.com/article/us-india-steel-exclusive/exclusive-modis... on tougher import rules imposed in August.
In September 2017, Reuters had reported that SAIL has expressed concerns https://in.reuters.com/article/india-arcelormittal-sail/arcelormittals-f... that ArcelorMittal`s move to acquire stressed assets in the country could jeopardise its proposed JV as it would violate its exclusive partnership to manufacture steel for cars.
($1 = 71.2840 Indian rupees)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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