POSCO Group has escalated its India expansion strategy, agreeing with JSW Steel Ltd. to develop a 6 million-ton integrated steel plant, marking a 20% increase from their original 5 million-ton proposal outlined just four months ago. The revised heads of agreement signals intensified competition for India’s fast-growing steel market, where domestic demand is projected to surge 8-9% annually through 2025.
The 50:50 joint venture targets Odisha state, leveraging the region’s abundant iron ore and coal reserves to reduce logistics costs. However, the partnership remains contingent on a comprehensive feasibility study examining investment requirements, regulatory clearances, and resource availability – criteria that have historically derailed POSCO’s India ambitions.
The steelmaking joint venture will be owned equally by POSCO and JSW, India’s No. 3 steel producer. Industry estimates suggest the project could require approximately $6 billion in capital investment, based on standard industry metrics of $1 billion per million tons of capacity.
POSCO’s renewed India push comes after a troubled history in the country spanning nearly two decades. The Korean giant’s most notable setback was a $12 billion Odisha project, initially announced in 2005, that collapsed in 2017 following persistent land acquisition disputes, environmental clearance delays, and mining law changes that eliminated preferential access to iron ore resources.
India’s steel demand is projected to grow by 8-9% in 2025, significantly outpacing the growth rates of other countries, driven by infrastructure spending and urbanization initiatives. The growth trajectory contrasts sharply with global steel markets, where demand is declining in China and remaining constant in OECD economies.
For JSW Steel, the partnership represents another capacity expansion opportunity as the company targets 50 million tons of domestic capacity by 2031. The Mumbai-based steelmaker currently operates 35.7 million tons of consolidated capacity and benefits from established relationships with Indian automakers and infrastructure developers.
POSCO currently maintains only a downstream rolling facility in Maharashtra, producing cold-rolled steel sheets for automotive manufacturers including Maruti Suzuki, Hyundai, and Kia. The proposed integrated plant would mark the company’s first upstream steelmaking operation in India, potentially providing cost advantages through proximity to raw materials.
The partnership faces execution risks typical of large-scale Indian industrial projects, including land acquisition complexities, environmental approvals, and infrastructure development requirements. Previous international steelmakers, including ArcelorMittal, have encountered similar challenges in establishing greenfield operations across the country.
