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ArcelorMittal to make auto steel in India in 3 years as car output booms -official

Fri 15th December, 2017 9:23am
By Krishna N. Das 
    NEW DELHI, Dec 15 (Reuters) - India's state steel company 
will start producing automotive steel in a $1 billion 
partnership with ArcelorMittal  MT.AS  in three years, a top 
government official said, helping cut imports of high-grade 
steel as the country revs up car manufacturing. 
    Steel Authority of India Ltd  SAIL.NS  has approved entering 
into a "non-binding" agreement of terms on the joint venture 
with the world's biggest maker of the alloy, the state 
steelmaker said in a statement on Wednesday, confirming a 
Reuters report from Dec. 7 on the impending approval. 
 urn:newsml:reuters.com:*:nL3N1O733C (http://bit.ly/2BqSrNB)      
    SAIL said a definitive agreement with ArcelorMittal would be 
"finalised in due course subject to financial viability", but 
Steel Secretary Aruna Sharma told Reuters on Friday the joint 
venture would start production in three years.  
    Sharma, the top civil servant in the steel ministry, which  
controls SAIL through the government's 75 percent stake in the 
steelmaker, did not elaborate on the time or other details. 
    SAIL spokesman M.C. Agrawal said the company and 
ArcelorMittal have cleared the first stage in the process of 
signing a formal agreement on the automotive steel venture, but 
that it was too early to talk about any production deadline.    
    An ArcelorMittal spokeswoman did not immediately reply to a 
request for comment.  
    SAIL and ArcelorMittal signed a preliminary understanding in 
2015 to jointly produce 1.2 million tonnes of automotive steel a 
year, but disagreements over commercial terms have delayed the 
venture that would give the Luxembourg-based company a foothold 
in the world's fastest growing steel market.  
    ArcelorMittal has also been looking for other way into the 
Indian steel market, planning to bid for debt-ridden firms such 
as Bhushan Steel  BSSL.NS , Essar Steel and Bhushan Power and 
Steel, Reuters reported in September.  urn:newsml:reuters.com:*:nL4N1M72B3  
    India is banking on the SAIL partnership with ArcelorMittal 
to cut imports of high-grade auto steel, which mostly comes from 
Japan and South Korea. India is a major automobile producer and 
exporter, and the country is stepping up manufacturing under 
Prime Minister Narendra Modi's "Make in India" campaign.  
    Maruti Suzuki  MRTI.NS , Hyundai Motor  005380.KS  and Tata 
Motors  TAMO.NS  are among the top-selling carmakers in the 
country. India is forecast to be the world's third-largest car 
market by 2020, up from fifth-largest now.  urn:newsml:reuters.com:*:nL3N1JW3Y6  
    For money-losing SAIL, the deal would help it rise up the 
value chain and compete more effectively with private rivals 
such as JSW Steel  JSTL.NS  and Tata Steel  TISC.NS , both of 
which already make auto-grade steel.  urn:newsml:reuters.com:*:nL3N1NF50L  
    Billionaire Sajjan Jindal's steel-to-power JSW Group has 
built enough capacity to make 2.3 million tonnes a year of 
auto-grade steel with technology from Japan's JFE Holdings 
 5411.T , and plans to diversify into electric car manufacturing 
using its own steel. 
 (Reporting by Krishna N. Das; Editing by Tom Hogue) 
 ((Krishna.Das@tr.com; +91-98711-18314,  +91 11 4954 8026; 
Reuters Messaging: Krishna.Das.thomsonreuters.com@reuters.net, 
Twitter: https://twitter.com/krishnadas56)) 
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