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, sources told Reuters. "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 partnership is key 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 differences 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.
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.
"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, Essar Steel and Bhushan Power and Steel, Reuters reported in September. Reuters has also reported that Japan's JFE Holdings Inc and India's JSW Steel Ltd are lining up a joint bid with a private equity firm for the assets of Bhushan Steel.
ArcelorMittal, known for turning around troubled steel assets, had earlier run into disagreement with SAIL over its intentions to bid for Indian companies.