Kobe Steel’s decision to set up a Greenfield plant in joint venture with Essar Steel is part of a larger multi pronged strategy by the Japanese steelmaker to gain a foothold in India’s growing steel market.
While Kobe is eyeing a significant presence in automotive steel, the company is also pursuing possible joint ventures with SAIL and NMDC that will ensure its presence at the cutting edge of new generation, iron-making techniques that could be up to 15% to 20 % more cost effective than present ones.
Thus one part of Kobe’s strategy to make steel sheets used for making cars, is similar to what Sumitomo Industries, JFE Corp or Nippon Steel plan to do with Indian partners like Bhushan Steel, JSW Steel and TATA Steel respectively, gain a share of the rapidly growing automotive steels market by having a manufacturing presence here.
As Mr Malay Mukherjee CEO of Essar Steel Business Group said that "The auto industry is expected to be a major driver for steel demand in the country in the years to come. This MoU will further strengthen Essar Steel's product portfolio to enable it to produce steel for high end applications in the auto segment."
However, what makes Kobe's strategy different from the other Japanese steel companies and even the likes of other global steel majors like ArcelorMittal or POSCO is that it is looking beyond high value steel products at alliances that could adopt and make use of alternative iron making technologies developed and owned by it.
More specifically, Kobe is hawking ‘ITmk3’, its patented technology for making iron nuggets using iron ore fines and non coking coal.