India’s JSW Steel Ltd would spend $500 million to build out its U.S. operations in Texas. The company has signed an agreement with the Texas governor’s office, under which the governor has approved a grant worth $3.4 million to the company’s unit, the steelmaker said in a statement.
The unit, JSW USA, sells high-quality carbon plates to the energy, petrochemicals, defence and other heavy equipment industries.
The company will use $150 million of the funds to improve and modernize its plant in Baytown, Texas, while the rest will fund a new facility, it said.
“The Texas plant has been struggling for a long time,” said analysts. “Basically the company is going to do some backward integration, which is a good idea considering that U.S. is surplus in steel scraps, and imports are higher considering the recent tariffs. So that makes the case for investment.”
The unit produced 59,623 net tons of steel plates at a capacity utilization of 24 percent and 15,109 net tons of steel pipes at an 11 percent utilization, in the quarter ended December 31.
“Access to natural gas at extremely economical prices and the abundant availability of scrap steel in Texas make conditions very conducive for manufacturing through the Electric Arc Furnace Route,” said Parth Jindal, director of JSW USA and son of JSW group Chairman and Managing Director Sajjan Jindal.
The investment will be made in phases and the capex plan is expected to completed by March 2020.
JSW Steel announced signing a memorandum of cooperation between its US subsidiary and the office of governor, Texas, for the same. As part of the memorandum, governor Greg Abbott has also approved $3.4-million grant from the Texas Enterprise Fund to the company. The intended investment by JSW USA will be used to undertake capability enhancement of its plate & pipe mill unit located in Baytown, Texas. Speaking to reporters at a press conference, Parth Jindal, director, JSW USA said, “JSW Steel (USA) wish to create a fully integrated steel complex that will bring precision manufacturing of high-quality steel plate and pipe to Texas, USA.”
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