Weak steel market to delay Mesco-Posco Finex deal
The transfer of Finex, a technology patented by Posco, to Mesco Steel is in abeyance because of a slowdown in the steel industry. Both Posco and Mesco have mutually agreed to delay the project till the industry revives.
“The kind of technology they wanted to bring is too expensive and steel industry is not doing well. There is a mutual agreement. We will not effect the transfer till the steel industry picks up,” said Rita Singh, chairperson-cum-managing director, Mesco Steel.
To facilitate the transfer of Finex technology, both Mesco and Posco had signed a memorandum of agreement in March 2015. In a statement, Mesco Steel had said Posco would have 26 per cent equity in the joint venture (JV) project.
Noted consultant Dastur & Company was roped in to study the modalities of the technology patented by Posco. Since the Finex plant requires a lot of oxygen and power, Mesco has initiated talks with some firms for setting up auxiliary plants on the JV route. The Finex plant would need a running 100 Mw captive power plant (CPP) and an oxygen plant of 1,000 tonne per day (tpd) capacity.
Finex is expected to cut hot metal production cost for Mesco by ~2,000-2,500 per tonne. The technology, developed exclusively by Posco, is a process of smelting iron ore without using expensive coking coal. As it uses normal coal abundantly found in Odisha, it will reduce the cost of production for hot metal.
It was agreed upon that both Posco and Mesco would enter into a definitive pact for transfer of Finex technology. After that, the process of dismantling of Posco’s Finex plant in Korea and its subsequent installation at Mesco premises would take off.
Mesco’s Kalinganagar plant has a pig iron making facility of 1.2 million tonnes per annum.