New Delhi, Dec 7: State-owned Steel Authority of India Ltd (SAIL) is set to approve a long-proposed $1 billion joint venture with ArcelorMittal at its board meeting next week, three sources with direct knowledge of the matter told Reuters.
The decision to approve the deal was reached after talks between ArcelorMittal’s billionaire Chairman Lakshmi Mittal, India’s Steel Secretary Aruna Sharma and SAIL Chairman P.K. Singh at a meeting last week in New Delhi.
The much-delayed collaboration to make automotive-grade steel is nearing realisation after legal teams from SAIL and ArcelorMittal finalised a joint term-sheet in talks mediated by a government think-tank in the past two weeks, the sources said.
“The joint term-sheet has been prepared and it should hopefully reach its logical end soon,” a senior government official involved in the talks said. “SAIL has called an emergency board meeting to approve the joint venture.”
The official did not give a day for the meeting, but two sources with knowledge of the talks said it would be Tuesday. The sources asked not to be named because there had not been any official announcement.
SAIL, ArcelorMittal and the steel ministry did not immediately respond to requests for comment.
India is banking on the partnership to cut imports of high-grade auto steel that mostly comes from Japan and South Korea. India is a major automobile producer and exporter.
SAIL and ArcelorMittal signed a preliminary understanding in 2015, but disagreements over key commercial terms have delayed the venture that would give the Luxembourg-based company a foothold in the world’s fastest growing major steel market.
The venture agreement was extended multiple times, and the last extension lapsed on November 30, the sources said.
One of the key points of disagreements between SAIL and ArcelorMittal had been on internal rate of returns and a “non-compete” clause.
The sources said the two companies were still exploring the location for the joint venture company in Maharashtra and Gujarat states in the west, and Andhra Pradesh in the south.