JSW Steel expects its US operations to turn profitable in the next two years with the planned investment of $500 million (₹3,250 crore) at its existing plant at Baytown in Texas.
The company will invest $150 million to modernise the existing one million tonne (mt) of pipe and plate mill in the first phase which will be completed by March 2019.
In the second phase, it will set up a new melt and steel manufacturing plant with investment of $350 million to triple the production capacity to 3 mt per annum by 2020.
The US investment will generate 500 jobs with an average salary of $65,000 per month. The pipe and plate mill, which is currently operating at 30 per cent, employs 350 people.
The Governor of Texas has approved a grant of $3.4 million from the Texas Enterprise Fund to JSW Steel (USA) Inc.
Growing demand
Parth Jindal, Director, JSW Steel US, said the demand for pipes and plates in the US has revived as the government is relaying water pipes and rebuilding old bridges.
This apart, he said the cost of production has come down substantially with availability of ample gas and electricity supply.
Earlier, the company used to import slabs from India, Mexico and Brazil, but with fresh investment it will become an integrated steel company and start generating profit in two years, said Parth Jindal, who is also the son of the promoter Sajjan Jindal.
In the last 10 years, the Group invested $1.2 billion in the US and has so far turned profitable only at the Ebitda-level due to large scale steel imports.
Denying that the fresh US investment is timed with the new steel anti-dumping duty, Sajjan Jindal, Chairman, JSW Group, said the investment plan has been in the works since last 18 months and the integrated steel plant will bring down cost substantially.
Asked why JSW Steel is looking at the US for investment when large steel companies like ArcelorMittal are coming to invest in India, Sajjan Jindal said the company has already committed huge capex in India and the fresh US investment will not deter expansion here.
Gregory Wayne Abbott, Governor of Texas, said the planned JSW investment will not only expand the mill in Baytown but also enable the company to supply steel for defence and domestic infrastructure projects.