By Bizodisha Bureau in Bhubaneswar, August 11, 2015 : South Korean steel major Posco on Tuesday signed a pact with an Indian firm for setting up an estimated USD 3-billion steel plant in Maharashtra – the first Indian facility for the global giant.

Posco had waited for a decade to set up USD 12-billion integrated steel plant in Odisha’s Jagatsinghpur billed as the largest FDI in India. Posco has been facing issues regarding its mega project in Odisha on account of delays in raw material security, land acquisition as well as other clearances.

Last month, Posco said it has shifted its focus from the USD 12-billion proposed steel plant in Odisha, citing “no progress” in the project

Just within a month of the announcement, Posco has inked the pact with Shree Uttam Steel and Power Ltd, an arm of Miglani family-run Uttam Galva Group to set up the 3 million ton integrated steel plant at Satarda in Maharashtra as a joint venture (JV) ooject. Posco will have 20 per cent stake.

The plant would be the first in India for POSCO, the world’s No.6 steelmaker, as it continues to battle regulatory hurdles for a decade-old project to set up a mega $12 billion steel plant in the eastern Odisha state.

POSCO, which already has steel processing centres in the cities of Pune, Chennai and near New Delhi, has made little progress and may scrap the Odisha project. The amendment of the Mines and Mineral [Development and Regulation] Act makes the steel major binding to compete with others to take part in the auction of the iron ore mines, which will be costlier than captive mine envisaged earlier for the proposed Odisha plant.

Initially 1.5 million ton per annum (MTPA) plant will come up with technology from Posco at a cost of about USD 1.5 billion.

Shree Uttam Steel and Power is owned by the co-promoters of Uttam Galva Steels Ltd, which is jointly owned by ArcelorMittal. Incidentally, NRI billionaire Lakshmi Mittal- led ArcelorMittal invested in Uttam Galwa after facing years of regulatory delays for its own proposed projects in India.

A pact in this regard was signed in Mumbai on Tuesday between Shree Uttam Steel and Power and steel giant Posco.

The debt equity ratio is 2:1 and the work on project will start in mid-2016, company sources said. The project will pave way for Posco’s entry into the domestic market.

The proposed plant will use low grade iron ore, which is readily available from Goa, near its plant.