SAIL, Japan's Kobe continue talks for steel plant

Steel Authority of India on Monday said it is continuing a joint feasibility study with Japan's Kobe Steel for a steel plant and a 1,000 megawatt gas-based power plant in north India.

The steel plant at Jagdishpur in Uttar Pradesh will involve investment of about 100 billion rupees ($2.2 billion), SAIL said, quoting India's federal steel minister.

The two companies have been examining a joint venture since last year, and a draft proposal had been expected early this year.

On Monday, SAIL did not give a timeframe for finalising the joint venture

SAIL said discussions were held by a joint task force and options are being examined for developing the steel and power plants.

The two companies plan to set up a 1,000-MW gas-based power plant and a steel plant based on gas-based direct reduced iron-making (DRI) technology for making value added products.

SAIL acquired the Jagdishpur assets in 2009 and is currently setting up a warehouse and corrugation unit as well as a mill to make TMT bars, which are used in construction.

India's growing status as a small-car hub is drawing global steel makers, especially Japanese firms, to the country.

Japan's JFE Holdings has taken a 14.9% stake in JSW Steel, while larger rival Nippon Steel is planning an automotive sheet steel joint venture with Tata Steel.

SAIL is also finalising plans to set up joint steel plants with South Korea's POSCO.

SAIL shares rose as much as 3% in afternoon trade, before paring some gains to trade up 2.2% at Rs 158.95, while the main stock index was up 0.7%.

($1=45.2 rupees)

(Reporting by Prashant Mehra; Editing by Aradhana Aravindan)