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Kobe Steel in talks with Indian firm on production

Kobe Steel Ltd, says it may build a steel plant in India or license its production technology to tap the country's fast-growing economy.

business Updated: May 23, 2007 10:34 IST

Kobe Steel Ltd, Japan's fourth-biggest steel maker, said it may build a steel plant in India jointly with Chowgule Group or license its production technology to tap the country's fast-growing economy.

Shares in Kobe jumped as much as 9 per cent in morning trade after the Nikkei business daily reported on Wednesday that Kobe plans to begin steel production in the country by 2009 through a joint venture with the Indian group.

A Kobe spokesman confirmed that Kobe and Chowgule might agree to build a 500,000-tonne-a-year steel plant using Kobe's technology called the ITmk3 process, that enables the production of high-grade steel from low-priced iron ore and coal.

But it was also possible that Kobe would only license the know-how, he added.

"We hope to conclude the deal by the year-end, but everything is up in the air," a Kobe spokesman said.

The business daily said the two parties plan to build the steel plant in Goa, with construction of the plant likely to start by the end of this year.

Kobe Steel's investment in the venture is expected to total 20 billion yen ($165 million), it said.

Kobe owns a pilot plant to test the process in Minnesota and has been talking with several US steel makers on building a commercial-scale plant using the technology.

President Yasuo Inubushi told reporters on Tuesday he expected US steel maker Steel Dynamics Inc to shortly become its first licensee of the process.

Demand for the technology is also strong in countries like Australia, Brazil and India where coal is abundant, Inubushi said.