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JSW Steel to invest $500m in Texas unit, to treble capacity

twitter-logo PTI        Last Updated: March 26, 2018  | 18:57 IST

Mumbai, Mar 26 (PTI) The JSW Group will invest up to USD 500 million more in its steel pipes and plates facility in Texas, helping it achieve the full 1-million tonne installed capacity of the plant it had bought in 2007 and stop sourcing raw steel from Latin America and India.

The JSW group had bought the then bankrupt Baytown steel asset for USD 810 million in October 2007, and is operating at just about 30 per cent or 3 lakh tonne now.

Since the acquisition, JSW has invested around USD 220 million in working capital and incurred USD 170 million in losses, taking its total exposure to the facility to USD 1.2 billion, JSW Group chairman Sajjan Jindal said here today.

"The Jindals investment will go into backward integration and also to create the first melt and manufacture contiguous plates and pipes facility in Texas," Texas governor Gregory Abbott told reporters here while signing the investment pact.

Junior Jindal, Prath, who is also a director at the Group and also heads the US operations of JSW Steel, was quick to add the plant since then has almost turned around with cash profit of USD 180 million last year and expressed optimism that it will turnaround fully by 2020.

The plant will serve the oil and gas rich Texas, which is the second largest American state and also the largest exporter from the worlds largest economy, Abbott said.

He said the investment over the next two years will create 500 new jobs. The plant already employs 350 people.

The junior Jindal said currently the plant, which runs at 30 per cent of the installed 1-million tonne capacity, sources steel from Brazil, Mexico and India, which will stop completely once the new facility is commissioned as it will sourcing raw steel from within Texas/US itself.

"From India alone, we have been importing 1.5 lakh tonne of raw steel plates. This will come to an end by October 2020 when the second phase of expansion is complete. The first phase will be over by March 2019," Parth Jindal said.

Sajjan Jindal said the plant will get USD 3.4 million from the Texas Enterprise Fund on completion of the investment, which is subject to the approval from the environmental protection agency.

The plant will come up at Baytown in the minerals-rich state, around 30 miles from Houston, senior Jindal said.

Parth Jindal also said JSW Steel USA Inc will be rebranded as JSW USA.

When asked about the timing of investment as to whether this was aimed at circumventing the new duties slapped on steel imports by the Donald Trump regimen, Parth parried a direct answer saying, "this investment is part of our long-term strategy to enhance our US footprint.

"It reiterates our commitment to stay invested and grow in the US market. It also provides us with an opportunity to participate in Americas infrastructure development and job creation priorities."

He further said the decision is also driven by the easy access to natural gas at extremely economical prices and abundant availability of scrap steel in Texas.

He said this investment was in the works for the past 18 months but was delayed due to very low crude prices.

"Since the prices have recovered to reasonable levels now, we thought of speeding up our plans. The Texan oil and gas industry needs 8-mt of steel pipes and plates annually of which almost 25 per cent are met through imports. This market is what we are trying to capture.

"Since the crude prices have moved up there is lot of replacement demand for pipes and plates now in the oil sector," the junior Jindal said.

Commenting on the investment, Abbott said, "This will not only expand the steel mill in Baytown, but will also construct a facility that will use melt-and-manufacture technology thereby enabling the company to supply steel for defence and domestic infrastructure projects."

"This investment will strengthen our overall partnership and generate more economic activity in Texas, creating up to 500 new jobs as well as provide high-quality steel products to the US," the governor added.

Already a USD 150-million investment is underway at the plant to augment its capabilities, which will be completed by March 2020. JSW will invest USD 350 million more to set-up a new hot-end facility to make steel melt and manufacture.

The Baytown facility is already one of the largest steel plates and pipes mills in Texas and serves the energy, petrochemicals, defence and other heavy industries. PTI BEN SS SS

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