ArcelorMittal Nippon Steel India has filed a lawsuit against the Indian government after a retroactive ban on low-ash metallurgical coke imports threatens its operations. The restrictions, imposed to support local suppliers, have raised significant concerns about production capacity and financial implications for the joint venture.
ArcelorMittal’s joint venture in India has initiated legal action against the Indian government, asserting that it is incorrectly enforcing retroactive restrictions on imports of low-ash metallurgical coke, a crucial steelmaking raw material. These restrictions, established in January to support domestic suppliers, have raised concerns about quality for notable industry players like ArcelorMittal Nippon Steel India. The company has indicated serious implications for its operations, including potential production reductions and delays in expansions due to these import limitations.
On March 5, ArcelorMittal Nippon took its grievances to the Delhi High Court, challenging the government’s rejection of import orders for 168,300 million tonnes of met coke from Indonesia and Poland. The government contended that the firm had adequate met coke stock; however, ArcelorMittal Nippon contended that the government’s actions contradict India’s free trade policies and undermine market confidence.
The controversy highlights the government’s intent to apply regulatory changes retroactively, creating significant anxiety among traders. In a related development, rival JSW Steel has also challenged the Indian government in court regarding import delays valued at approximately $90 million, emphasizing that consistent policy enforcement is critical for operational effectiveness.
India’s Steel Secretary has stated that there is sufficient domestic met coke available, asserting that companies prefer imports due to lower pricing, which underpins the industrial reliance on foreign materials. However, ArcelorMittal Nippon has warned that the restrictions could result in substantial financial loss, with potential costs of $25 million for each affected shipment, alongside additional daily detention fees for vessels. Their recent communication to the government conveyed urgency, indicating that if the restrictions remain, they may have to cease operations imminently.
ArcelorMittal Nippon holds a 5% market share in India’s steel production sector, which boasts an annual capacity of 200 million metric tons. Meanwhile, imports of low-ash met coke have surged more than double over the past four years, yet regulatory actions have capped total import volumes at 1.4 million metric tons from January through June.
ArcelorMittal’s legal challenge against the Indian government’s retroactive import restrictions signifies a critical conflict in India’s steel industry. The restrictions pose serious risks to the company’s operations and financial stability, which could lead to a significant contraction in production capabilities. While the government claims adequate domestic supply, the ongoing legal battles highlight the urgent need for clear and consistent trade policies to foster investor confidence and effective business planning in the sector.
Original Source: money.usnews.com
