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JFE, JSW Agree on Strategic Collaboration
11/23/2009 - JFE Steel Corp. and JSW Steel Ltd. signed an agreement on November 19 to collaborate with each other in India in the area of automotive steel. The companies have also identified several other areas where possible collaboration can be explored in India in the future.
JFE Steel Corp. and JSW Steel Ltd. signed a collaboration agreement on November 19 in Mumbai, providing a platform for both companies to leverage each other’s strength to their mutual benefit.
At the outset, the parties have in principle agreed—subject to regulatory approvals, entering into definitive agreements, and fulfilling all conditions precedent as may be agreed to between the parties in the definitive agreements—to collaborate with each other in India in the area of automotive steel, including production technologies and supply of substrate materials for hot rolled, cold rolled, and galvanized products.
The scope also covers joint service activities including application engineering and product development for automotive customers. Separate detailed agreements spelling out the scope and time frames will be executed by the two companies area by area.
JFE and JSW have also identified other areas where possible mutual collaboration can be explored in India in the near future in accordance with applicable laws, including:
- Production of steel products other than automotive steel
- Energy-reduction and environmental programs
- Quality and yield improvement programs
- Performance audit of JSW facilities
- Benchmarking of techno-economic parameters between the parties
- Procurement of raw materials both in and outside of India
- Project for building and operating an integrated steel production facility in JSW’s West Bengal Steel Project
- Mutual stockholding.
“This collaboration opens up new vistas for our massive expansion projects and is an important milestone in JSW’s mission of moving up the value chain in steel production,” said Sajjan Jindal, VC & MD of JSW Steel.
“JFE, with this agreement, is determined to intensify its relationship with JSW to serve the request of its automotive customers, which are rapidly expanding production, in local procurement of value-added steel products,” said Hajime Bada, President and CEO of JFE Steel. “This agreement shall also provide JFE an avenue to look into the future possibilities of development in India.”
JSW Steel plans to expand its production capacity to 11 million tonnes per annum by 2011 from the current levels of 7.8 million tonnes per annum. The company achieved volume growth of 54% in crude steel production and 74% in saleable steel during the second quarter of FY 09-10. Its extra wide Hot Strip mill is expected to be ready by March 2010. The company has plans to expand its capacity to 32 million tonnes per annum by 2020 by setting up greenfield projects of 10 million tonnes per annum each in Jharkhand and West Bengal.
JFE is aiming to secure a local production base to serve customers in the high-growth Indian market.
JFE Steel Corp., the second-largest steel company in Japan with an annual production of 33 million tonnes in year 2008, is the main operating company under JFE Holdings, Inc. JFE Steel has three main production centers: two large coastal steelworks located respectively in eastern and western Japan and Chita Works. It also has technical research centers at both steelworks and at Chita Works, which are responsible for the development and application of the most advanced steel making technologies in the world. Complete energy saving/resource saving measures have been incorporated in all production processes. JFE Steel achieved net sales of more than 3.4 trillion yen and ordinary income of 413 billion yen for the fiscal year ended March 31, 2009.
JSW Steel Ltd., belonging to JSW group, part of the O P Jindal Group, is one of the lowest cost steel producers in the world. JSW Steel, India’s leading private sector steel company, is engaged in manufacture of flat and long products including hot and cold rolled coils, galvanized and color-coated products, auto grade / white goods grade CRCA steel, bars and rods. Incorporated in 1994, JSW Steel has the largest galvanizing and color coating production capacity in the country and is the largest exporter of galvanized products with presence in over 100 countries across five continents.
