SINGAPORE Australias BlueScope Steel Ltd. and Japans Nippon Steel & Sumitomo Metal Corp. (NSSMC) have begun operations at their $1.36-billion coated products joint venture.
The sale of a 50-percent stake in BlueScopes coated steels unit to NSSMC was concluded March 28. Through the partnership, BlueScope hopes to tap into the bigger markets and new technologies, in addition to pocketing $540 million from the sale.
"The (joint venture) is being considered as a supplier to a number of key Japanese customers in the region and it will look at manufacturing products for the home appliance market," BlueScope managing director and chief executive officer Paul OMalley said.
The joint venture, called NS BlueScope Coated Products, will be headquartered in Singapore and led by Sanjay Dayal. The company will employ more than 3,000 people across 29 plants in seven countries.
"By inputting NSSMCs proprietary technologies and product bundles to the joint venture, NSSMC is pursuing the opportunities to access and capture a larger market field, such as the home appliances market in Southeast Asia, taking advantage of NSSMCs geographic proximity to the market," the Japanese steelmaker said.
NSSMC also said it wanted to take advantage of rapidly expanding demand for coated products in the building and construction fields in Southeast Asia and North America.
The jointly owned company is establishing its own debt-funding facilities for $300 million, BlueScope said. These facilities will be used to repay existing financing provided by BlueScope and for ongoing funding requirements, it added.
"The proceeds from this investment by NSSMC strengthen BlueScopes balance sheet and financial flexibility. The (joint venture) provides a platform for us to invest selectively in growth opportunities," BlueScope chairman Graham Kraehe said.
A version of this article was first published by AMM sister publication Steel First.