Kobe Steel’s decision to set-up a greenfield plant in joint venture with Essar Steel is part of a larger multi-pronged strategy by the Japanese steelmaker to gain a foothold in India’s growing steel market.
While Kobe is eyeing a significant presence in automotive steel, the company is also pursuing possible joint ventures with SAIL and NMDC that will ensure its presence at the cutting edge of new generation, iron-making techniques that could be up to 15-20% more cost effective than present ones.
Thus one part of Kobe’s strategy to make steel sheets used for making cars, is similar to what Sumitomo Industries, JFE Corp or Nippon Steel plan to do with Indian partners like Bhushan Steel , JSW Steel and Tata Steel respectively, gain a share of the rapidly growing automotive steels market by having a manufacturing presence here.
As Malay Mukherjee, CEO, EssarSteel Business Group said: “The auto industry is expected to be a major driver for steel demand in the country in the years to come. This MoU will further strengthen Essar Steel’s product portfolio to enable it to produce steel for high-end applications in the auto segment.”
However, what makes Kobe’s strategy different from the other Japanese steel companies and even the likes of other global steel majors like ArcelorMittal or Posco, is that it is looking beyond high-value steel products at alliances that could adopt and make use of alternative iron-making technologies developed and owned by it.
More specifically, Kobe is hawking ‘ITmk3’, its patented technology for making iron nuggets using iron ore fines and non-coking coal.
At around $300 per tonne, this gives significant advantage in terms of investment cost of setting up a plant compared to the blast furnace method, according to findings published in research papers by the Joint Plant Commitee.
“The cost advantage in terms of production of steel is difficult to estimate but it could be nearly 15-20%, which is substantial,” Kosher Ostwald, chairman and managing director of CNI Research said. In the Indian perspective, this could serve as an answer to the domestic steel sector’s raw material needs to a large extent since it does not require more expensive inputs like iron ore lumps and coking coal.
Kobe’s talks with SAIL are at an advanced stage and the two had signed an MoU earlier this month for a strategic alliance while SAIL’s plans include setting-up of a Rs. 5,000 core unit at the Alloy Steels Plant in Durgapur. The largest domestic iron ore company, NMDC, too is looking at using this technology for iron making.
However, this technology is at a pilot stage and much would depend on the success of Kobe Steel’s first commercial plant using this technology, a 0.5 million tonne unit at Minessota in the US.
While Kobe is eyeing a significant presence in automotive steel, the company is also pursuing possible joint ventures with SAIL and NMDC that will ensure its presence at the cutting edge of new generation, iron-making techniques that could be up to 15-20% more cost effective than present ones.
Thus one part of Kobe’s strategy to make steel sheets used for making cars, is similar to what Sumitomo Industries, JFE Corp or Nippon Steel plan to do with Indian partners like Bhushan Steel , JSW Steel and Tata Steel respectively, gain a share of the rapidly growing automotive steels market by having a manufacturing presence here.
As Malay Mukherjee, CEO, EssarSteel Business Group said: “The auto industry is expected to be a major driver for steel demand in the country in the years to come. This MoU will further strengthen Essar Steel’s product portfolio to enable it to produce steel for high-end applications in the auto segment.”
However, what makes Kobe’s strategy different from the other Japanese steel companies and even the likes of other global steel majors like ArcelorMittal or Posco, is that it is looking beyond high-value steel products at alliances that could adopt and make use of alternative iron-making technologies developed and owned by it.
More specifically, Kobe is hawking ‘ITmk3’, its patented technology for making iron nuggets using iron ore fines and non-coking coal.
At around $300 per tonne, this gives significant advantage in terms of investment cost of setting up a plant compared to the blast furnace method, according to findings published in research papers by the Joint Plant Commitee.
“The cost advantage in terms of production of steel is difficult to estimate but it could be nearly 15-20%, which is substantial,” Kosher Ostwald, chairman and managing director of CNI Research said. In the Indian perspective, this could serve as an answer to the domestic steel sector’s raw material needs to a large extent since it does not require more expensive inputs like iron ore lumps and coking coal.
Kobe’s talks with SAIL are at an advanced stage and the two had signed an MoU earlier this month for a strategic alliance while SAIL’s plans include setting-up of a Rs. 5,000 core unit at the Alloy Steels Plant in Durgapur. The largest domestic iron ore company, NMDC, too is looking at using this technology for iron making.
However, this technology is at a pilot stage and much would depend on the success of Kobe Steel’s first commercial plant using this technology, a 0.5 million tonne unit at Minessota in the US.
Next Story
