JSW Steel and POSCO plan to invest $7.7 billion in a steel plant in Odisha

India’s JSW Steel and South Korea’s POSCO intend to jointly invest 650 billion rupees (about $7.73 billion) in the construction of a steel plant in the eastern Indian state of Odisha. The plant, with an initial capacity of 5 million tons of steel per year, will be part of their strategy in the growing steel market of India, a country with the fastest economic growth among the world’s major economies, Reuters reports.

The cooperation agreement between JSW Steel and POSCO was signed last week, although the parties did not disclose specific financial details of the deal. According to sources, the initial investment in the project will amount to 200 billion rupees, and the plant is planned to be commissioned next year. Within three years, the company’s production capacity should increase to 18 million tons per year, which will require a full investment of $7.73 billion.

Demand for steel in India has grown significantly amid rapid economic development and infrastructure expansion, making the country a promising destination for the steel industry on the global stage, particularly as demand in Europe and the US declines. During the period from April to August this year, steel demand in India reached its highest level in seven years, driven in part by the growth in the construction of new plants and warehouses for large corporations seeking to diversify their production chains.

According to the sources, the new plant will produce hot-rolled, cold-rolled and galvanized steel. This is not POSCO’s first attempt to build a large enterprise in India: a few years ago, the company planned to invest $12 billion in the largest foreign direct investment project in India at the time, but eventually abandoned the plan due to difficulties in acquiring land.

As GMK Center reported earlier, JSW Steel plans to invest $1 billion in decarbonizing its facilities. This will contribute to the company’s ambition to become carbon neutral by 2050 and reduce CO2 emissions by 42% (1.95 tons of CO2 per ton of steel) by 2030.

Recently, the company announced that it will acquire a nearly 67% stake in an Australian private company for $120 million to expand its coal reserves. The deal is to buy a stake in M Res NSW, a subsidiary of the coal company M Resources.