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Steelmakers

POSCO to revive India steel mill construction plan

POSCO signs MOU with India's Adani Group build steel plant; seeks to build electric arc furnaces in the US

By Jan 13, 2022 (Gmt+09:00)

(Courtesy of POSCO)
(Courtesy of POSCO)

POSCO Co. plans to build a steel mill jointly with India's Adani Group in western India, the South Korean steelmaker said on Thursday, after its previous efforts to construct a steel plant in eastern India went awry in 2017. 

Under a memorandum of understanding signed between the two groups last week, they will build an eco-friendly integrated steel mill in the western state of Gujarat and explore various business opportunities in the fields of renewable energy, hydrogen, logistics and chemical products.

The steel plant is highly likely to be located in Mundra, Gujarat. An integrated steel mill converts ore to iron, then to steel and finally to other semi-finished or finished steel products.

"POSCO's steelmaking technology and Adani Group's expertise in energy and infrastructure sectors will create synergies for not only the steel business, but for our future eco-friendly business," POSCO Chairman and CEO Choi Jeong-woo said in a statement.

Adani Group, established in 1988, is India's largest energy and logistics company and is based in Gujarat. Its businesses range from harbor operations, resource development, electricity generation and renewable energy development. Recently, it announced a massive investment plan to produce green hydrogen.

Back in 2005, POSCO had tried to build a steel mill in the eastern state of Odisha
in India. But the plan was aborted after it faced strong opposition from its residents on concerns about environmental damage and failed to win mining rights from the Indian government. 
 
The world's sixth-largest steelmaker expects the new steel plant to be built in India to create synergy with its cold-rolled and galvanized steel mill in the Indian state of Maharashtra.

To smooth out the process, POSCO will make full cooperation with the state and central governments of India, where steel demand is forecast to reach 180 million tons by 2030.

POSCO's first blast furnace in Pohang, South Korea
POSCO's first blast furnace in Pohang, South Korea

The new steel mill also will be part of POSCO's medium to long-term plan to more than quadruple its overseas steel production capacity to 23.1 million tons by 2030, versus 5.1 million tons in 2021.

As part of the efforts, the South Korean steel giant will look for a joint venture partner to build electric arc furnaces in the US.

It currently operates an overseas integrated steel plant only in Indonesia, in the form of a joint venture with PT Krakatau Steel, Indonesia's largest steelmaker.
For the Indonesia-based steel mill established in 2010, POSCO will spend 12 trillion won ($10 billion) by 2030 to double its capacity.

For Adani Group, the world's largest solar power developer, the new steel mill will support its efforts to cut carbon emissions since the plant will use the hydrogen-based steelmaking process, which is based on an electric arc furnace.

The hydrogen-based steelmaking process also uses green hydrogen instead of coal as a reducing agent to separate oxygen from iron ore, to produce no carbon emissions.

Green hydrogen is the hydrogen generated from renewable energy, or green energy sources, for which India is picked as an ideal place.

Write to Jeong Min Nam and Jung-Hwan Hwang at by peux@hankyung.com

Yeonhee Kim edited this article.
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