Source: Economic Times
Posco Steel India has signed a memorandum of understanding with Essar Steel to buy 1 million tonne hot rolled products worth close to Rs 5,000 crore, a senior Posco executive said.
The said volume of steel will be supplied to Posco Maharashtra that houses a 2 million tonne facility in the state, to manufacture value added steel products like coated steel. It is the company's fourth MoU with Essar Steel that has earlier supplied more than 2.5 million tonne steel to Posco over the last five years.
Essar Steel's plant in Hazira is close to Posco's faciltiy in Maharashtra and the transportation also takes place through the sea route from Hazira to Dighi port, said GH Bang, managing director at Posco Maharashtra. "There is a competitive advantage that Essar Steel enjoys in terms of cost, but that aside, the quality of their steel has also improved over time," Bang said,
Posco has a 2 million tonne steel plant in Mangaon in Maharashtra.
The development holds significance as Essar Steel is still undergoing insolvency resolution process for having failed to pay banks debt worth Rs 49,000 crore as a plan offered by ArcelorMittal is awaiting a final nod by courts. The company's capacity utilisation has increased from 40% since it was admitted for insolvency close to two years ago to 85% currently. It produced 6.9 million tonne steel last fiscal year out of a name plate capacity of 8.4 million tonnes and is expected to clock more than 7 million tonne production this fiscal year.