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Tata Steel Ltd is to invest $675-700 million (around Rs 5,000 crore) in the joint venture with Iranian Mines and Mining Industries Development and Renovation Organisation over five years.
The Tata group company has signed two JVs and a memorandum of understanding with the Iranian state-run firm on Sunday for manufacturing of steel slabs and billets.
Under the first JV, the company would partner with IMIDRO in its ongoing Hormozgan Steel project and venture into manufacturing of the metal in the Persian Gulf Special Economic Zone at the port city of Bandar Abbas, Tata Steel Managing Director B Muthuraman said.
The first phase of this gas-based steel project would establish a 1.5 mtpa steel slab making facility, which would be followed by a second phase to set up a 1.5 mtpa of steel billet-making capacity.
The steel slab making facility is expected to go stream in April 2008. The billet-making plant would be operational by April 2009, he said.
The companies expect the venture to cost around $1,200 million, with a debt-equity ratio of 1:1, entailing the Tata group company to invest $350 million.
The project would be on a equity partnership basis of 49:49, while the remaining two per cent would be held by a provident fund trust of Iranian government.
Under the second JV, Tata Steel and IMIDRO would venture into exploring and mining of "unexplored iron ore mines" at the Gol-e-Gohar mines in Kerman province of Iron. The companies would also establish a gas-based pellet plant, with an estimated $150 million investment.
The Tata group's contribution would be $75 million and the iron ore plant is expected to be commissioned by April 2009.
"This would also be on a 49:49 basis, with the remaining 2 per cent again to be held by the provident trust," Muthuraman said.
Meanwhile as per the MoU, Tata Steel intends to establish a separate three mtpa export-oriented steel plant in two modules of 1.5 mtpa each, again at PGSEZ. The plant, whose first phase will be commissioned by 2009 and second by 2011, would be wholly owned by the Tata group company.
India's largest steel manufacturer intends to invest $350 million in the plant in its first phase, resulting in a total investment of around $650-700 million in the next five years, he said.
However, he did not reveal the expected investments in the second phase.
"Iran with its rich steel making inputs and quality infrastructure can become one of the favourable steel-making locations. Tata Steel has, after due consideration and evaluation, decided to move ahead with its proposed projects in Iran," he said.