Signage for JSW Steel Ltd. is seen on the exterior of the company’s manufacturing facility in Dolvi, Maharashtra, India. (Photographer: Dhiraj Singh/Bloomberg)

JSW Steel To Invest $500 Million In Texas Unit, To Treble Capacity

The U.S. arm of JSW Steel will invest $500 million in its Texas facility as it seeks to achieve 1 million tonne installed capacity and reduce its dependence on imports from India and Latin American nations.

“The catalyst behind this entire decision is what the Trump administration has done to protect the domestic steel industry,” Parth Jindal, director of JSW Steel USA told BloombergQuint. “The government is willing to promote local manufacturers and that’s exactly what we are trying to do.”

The company is in talks with the U.S. administration to seek an exemption for this particular project while the facility is being built. “If that does not come through we will switch our sourcing from India to Brazil, Mexico and other Latin American countries which are currently exempt, or source steel from the U.S.,” said Jindal.

The Trump administration recently imposed a tariff of 25 percent on steel and 10 percent on aluminium. Last week, India’s Commerce Minister Suresh Prabhu said India will likely seek an exemption from the tariffs during bilateral talks.

The investment is aimed at enhancing capacity of the JSW unit’s plate and pipe mill unit located in Baytown, Texas and to set-up a new hot-end facility to make steel melt and manufacture, the company said in a statement.

The Texas facility imports one-third of its steel from India and rest from countries like Brazil and Mexico. With the ramp-up, Jindal expects to reduce imports as it increases local manufacture. That will help reduce cost by $200 per tonne of raw material as freight costs go down, he added.

The entire project could take up to 24 months to be entirely commissioned and could triple sales and revenue for the company, Jindal said. Last year, JSW Steel USA’s revenue stood at $220 million while the sales were at 300,000 tonnes.

For this project, the company is planning to raise funds through a mix of debt raised locally from North America and equity from parent JSW Steel.