SAIL, Posco spar over controlling stake in JV

Is it the end of the road for the proposed Rs 16,000-crore SAIL-Posco steel joint venture? Even as an agreement is yet to be signed, differences between the two companies are out in the open with both insisting on having a controlling right over the proposed joint venture, a demand that looks set to scuttle their partnership plan for setting up a 3-million tonne per annum (mtpa) steel plant at Bokaro in Jharkhand.

Just minutes after steel minister Beni Prasad Verma and senior functionaries of state-owned SAIL insisted that no JV is possible without a “controlling right” for the Indian partner, the Korean steel major on Wednesday made it clear that it will ask for a majority stake in the JV as this is as per the declared “philosophy” of the company. “The rule within Posco is that we have to have a major share…, ” Ohjoon Kwon, president & chief technology officer, Posco, told TOI. Kwon is here to attend the World Steel Association conference . Asked whether the company would insist for a controlling 51% stake, he said, “Not just 51%, but majority.”

The statement by the Korean company’s official is not expected to go down well with the Indian government or the SAIL brass. “We will reject any JV plans with Posco if it is not a 50:50 partnership,” Verma said. Verma also said the chairman of the proposed JV should be an Indian. “SAIL officials will hold talks with Posco representatives , where we will raise this issue.”

Steel secretary D R S Chaudhary also rejected Posco’s demand for a majority control. “We do not want 51% equity to go to a foreign partner when we give our resources… If they invest in my country, I should have control,” Chaudhary said.A proposed JV between domestic iron ore major NMDC and Russia’s Severstal is also stuck on similar demands, though Severstal appears to be open to talks resolve the matter. “We are discussing. We still have the hope to work together,” Severstal CEO Alexy Mordashov said on the sidelines of the steel conference.

[Source — The Times of India]

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