JSW Steel close to buying US plant for $1.2 billion

JSW Steel Ltd., country’s fourth- biggest steelmaker, plans to buy a U.S. plant for $1.2 billion, its first purchase in the world’s largest economy.

"We're close to buying a steel-plate mill in the US," Sajjan Jindal, managing director of the Mumbai-based company, said in an interview on July 26. He declined to comment on whether the target was a plant owned by Jindal SAW Ltd., a pipe maker run by his elder brother.

The purchase would allow JSW Steel to ship raw-steel slabs to the U.S. to make products used by shipbuilders and energy companies, Jindal said. Larger rivals Tata Steel Ltd and Essar Steel Ltd have made overseas acquisitions to sell more profitable products and win customers outside Asia. “Indian steelmakers are spreading their wings far and wide to hedge against regional cyclicality in prices and demand,” A.S. Firoz, an analyst and former chief economist with steel ministry, said.

JSW Steel is more than doubling its slab-making capacity to 10 million metric tonnes by 2010. The company is also building a three-million-tonne hot-strip mill to covert slabs into products used by makers of cars and appliances. Some of the raw-steel slabs would be shipped to the U.S. mill, Jindal said

"The cost at the U.S. plant can be significantly lowered if we ship the steel from India and add value there,” he said.

First Published: Jul 31, 2007 03:37 IST