Japan's biggest steelmaker Nippon Steel Corp. said Tuesday it aims to roughly double output capacity at an Indian maker it has purchased with multinational giant ArcelorMittal S.A., to around 12 to 15 million tons a year in the future.
Nippon Steel and ArcelorMittal, which announced the completion of the 500 billion rupee ($7 billion) purchase of Essar Steel India Ltd. on Monday, plan capital spending of some 300 billion yen ($2.7 billion) at the Indian firm to first raise its annual output of steel to 8.5 million tons from some 6.5 million tons in fiscal 2018.
"India has high prospects of growth and potential. We want to enhance our corporate value by capturing (the country's) growth," Nippon Steel Managing Executive Officer Hidetake Ishihara told a press conference in Tokyo.
ArcelorMittal now owns a 60 percent stake in Essar, which was in insolvency proceedings and gained approval last month for its restructuring plan from the Indian top court, and Nippon Steel holds the remainder.
The Tokyo- and Luxembourg-based steelmakers will each send four directors to the board of Essar and make the new partner into an equity-method affiliate, meaning its earnings will be incorporated into their consolidated financial statements.
Nippon Steel has been boosting production overseas amid the slowing demand for steel at home. "To take in India's growth, (the purchase of Essar) was an extremely important project," Ishihara said.
Essar, which owns an integrated steel production facility in Gujarat state in western India, will produce steel mainly to meet growing demand in the construction and engineering sectors in the infrastructure-hungry country.
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