South Korean steel giant POSCO set its eyes on at least 50 per cent shareholding in the steel plant project proposed to be developed by way of a Joint Venture (JV) with Vizag based state-run Navaratna steelmaker RINL, the corporate entity of Vizag Steel Plant (VSP), as per details emerging. Vizag has been on the boil erupting in protests against the Union government’s proposal to fully privatise VSP, for which the Cabinet Committee of Economic Affairs (CCEA) had given its nod following an announcement in the Union Budget last week. Ever since the JV proposal had come up in 2018, POSCO’s top brass had visited VSP at least three times, twice in 2019 and once in 2020.
POSCO, which had failed to set up such a steel plant in Odisha, had evinced keen interest in setting up the plant in Vizag in the land belonging to RINL. POSCO was keen to set up a steel plant in Vizag as RINL is located on the eastern coast of India and the South Korean steel major can get access to South-East Asian markets while catering to the domestic needs of special steel through rail and road.
Availability of land in abundance, RINL already running a shore-based steel plant and proximity to both sea and airports prompted POSCO to evince interest in the steel plant in Vizag in JV with RINL. The proposal was also green-lit by the Centre. However, trade unions have been opposing POSCO–RINL JV proposal fearing the South Korean steelmaker will eventually take over the existing steel plant run by RINL, which would mean the plant falling into private hands.
“POSCO evinced interest to set up a Steel Plant in Visakhapatnam on RINL’s land. A non-binding MoU was signed in October 2019 between RINL and POSCO. Pursuant to the MoU, a Joint Working Group (JWG) was formed for exchange of information. The shareholding pattern has not been determined at this stage” Union Steel Minister Dharmendra Pradhan told the Rajya Sabha.
He said that however, as per MoU, POSCO wishes to have at least 50 per cent shareholding while the shareholding of RINL would be worked out on the basis of valuation of RINL’s in-kind contribution of the land for setting up of the plant. Pradhan said that a joint team of POSCO and Hyundai along with the Ambassador of South Korea to India had visited RINL, Visakhapatnam and participated in a meeting with representatives of RINL, NMDC and Ministry of Steel on October 22, 2018.
“Subsequently, a team of officials from POSCO visited RINL on July 9, September, 23 in 2019, and February 20, last year in connection with setting up of the plant,” he said. The project is estimated to have an investment of Rs 20,000 crore, and RINL’s land may become its equity. It is learnt that POSCO sought 1,170 acres for the venture and the RINL already has 22,000 acres.