JFE Steel Corporation and JSW Steel Ltd have bonded together in a historic collaboration agreement. The two companies signed the agreement on the November 19th 2009 in Mumbai. This collaboration agreement provides an ideal platform for both the steel companies to come together and leverage each others strength to their mutual benefit.
It may be recalled that JSW Steel is expanding its production capacity to 11 million tonne per annum by 2011 from the current levels of 7.8 million tonne per annum and is the largest private integrated steel manufacturer in India based on installed capacity.
The company achieved a significant volume growth of 54% in crude steel production and 74% in saleable steel during the second quarter of FY 09 10. JSW is poised to become a major player in the value added segment of products. Its extra wide state of the art Hot Strip mill will be ready by March 2010. The company has plans to expand its capacity to 32 million ton per annum by 2020 by setting up Greenfield projects of 10 million ton per annum each in Jharkhand and West Bengal.
JFE is the second largest steel company in Japan with an annual production of 33 million tones in year 2008, and ranks sixth in the world. It has an enviable global reputation of possessing cutting edge technology in the field of value added steel products, energy-saving and environment production with international benchmarks across a wide spectrum of steel manufacturing activities.
JSW is rapidly expanding its capacity and upgrading its technologies with its investment in various projects. JFE, with its world leading technologies in the production of value-added products, as well as environment protection and energy-saving technologies, is aiming to secure a local production base to serve customers in the high-growth Indian market. This time, the two companies shared the same vision in how to further strengthen our expertise in mutually beneficial manner and reached a strategic collaboration agreement.
1. Collaboration for Automotive Steel Production
At the outset, the parties have in principle agreed, subject to obtaining all 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 which shall spell out the scope and time-frames will be executed between the two companies area by area.
2. Further Collaboration in the near future
JFE and JSW have also arrived at a broad consensus on the areas where possible mutual collaboration can be explored in India in the near future in accordance with applicable laws. The areas include:
1. Production of steel products other than automotive steel.
2. Energy reduction programmes
3. Environmental programmes
4. Quality and yield improvement programmes
5. Performance audit of JSW facilities
6. Benchmarking of techno-economic parameters between the parties
7. Procurement of raw materials both in and outside of India
8. Project for building and operating an integrated steel production facility in JSW’s West Bengal Steel Project
9. Mutual Stockholding
10. Other items which may come in the mutual interest of the parties.
Mr Sajjan Jindal VC & MD of JSW steel said that “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.”
Mr Hajime Bada president & CEO of JFE steel said that “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. This agreement shall also provide JFE an avenue to look into the future possibilities of development in India.”
