Adani Group, South Korea's Posco plan $5-bn steel plant. Check key details here

Billionaire Gautam Adani-led Adani Group and South Korean steel giant Posco could together invest up to $5 billion in setting up an integrated steel mill in Gujarat. 

Adani Group said on Thursday it has agreed to explore business cooperation opportunities, including the establishment of a steel mill at Mundra, Gujarat, as well as other businesses.

What else do the two conglomerates plan on doing?

According to the non-binding pact, the two companies will collaborate at the group business level in various industries such as renewable energy, hydrogen, and logistics in response to carbon reduction requirements.

Both parties are examining options to cooperate and use each other’s technical, financial, and operational strengths.

The companies said that the planned steel mill will be based on Posco’s state-of-the-art technology and cutting-edge R&D capability. Posco and Adani also intend to utilize renewable energy resources and green hydrogen, in line with both partners’ ESG commitments to sustainability and energy efficiency.

Beyond the amount to be invested, why is the pact significant?

It is significant since Adani is rapidly ramping up its solar energy portfolio and its ports business with an aim to become carbon neutral by 2025.

In the past two decades, the group has rapidly diversified into ports, power generation and distribution, airports, data centres and digital services. Adani, who is also Asia’s second-richest person, has also been focusing recently on expanding his conglomerate into metals. Last month, the group set up a new subsidiary for aluminium.

Moreover, last year the Adani Group had said it will invest $20 billion in renewable energy over the next 10 years and also aims to make its port business a net-zero carbon emitter by 2025.

How big is Posco’s presence in India at present?

Posco already operates a 1.8-million-tonne cold-rolled and galvanized mill in Maharashtra and supplies parts to automakers. It also operates four processing facilities in Pune, Delhi, Chennai and Ahmedabad.

Interestingly, the pact with Adani comes five years after Posco abandoned its plan to invest as much as $12 billion to set up a mega steel plant in Odisha. Posco had signed an initial pact to set up the Odisha plant in 2007 but faced stiff resistance from locals, environmental groups and others, forcing it to cancel its plans after more than a decade.