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ArcelorMittal's $1 bln India joint venture to get green light next week- sources

Thu 7th December, 2017 11:21am
* Sources say meeting to approve deal set for Tuesday 
    * Billionaire Mittal met steel secretary, SAIL last week 
    * Venture aims to cut steel imports from Japan, S.Korea 
    * Commercial terms held up deal first outlined in 2015 
    By Neha Dasgupta 
    NEW DELHI, Dec 7 (Reuters) - State-owned Steel Authority of 
India Ltd (SAIL)  SAIL.NS  is set to approve a long-proposed $1 
billion joint venture with ArcelorMittal  MT.AS  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 Nov. 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.  urn:newsml:reuters.com:*:nL4N1M72B3 
    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. 
    "They want the location to be near to a port," the 
government official said. 
    ArcelorMittal is also planning to bid for debt-ridden Indian 
steel firms such as Bhushan Steel Ltd  BSSL.NS , Essar Steel and 
Bhushan Power and Steel, Reuters reported in September. 
    Reuters has also reported that Japan's JFE Holdings Inc 
 5411.T  and India's JSW Steel Ltd  JSTL.NS  are lining up a 
joint bid with a private equity firm for the assets of Bhushan 
Steel.  urn:newsml:reuters.com:*:nL3N1NS39C 
    ArcelorMittal, known for turning around troubled steel 
assets, had earlier run into disagreement with SAIL over its 
intentions to bid for Indian companies.  urn:newsml:reuters.com:*:nL4N1M72B3 
 (Reporting by Neha Dasgupta; Editing by Krishna N. Das and 
Edmund Blair) 
 ((neha.dasgupta@tr.com; +91-11-49548058; Reuters Messaging: 
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