Sumitomo Metal Considers Overseas Expansion in India

April 14 (Bloomberg) -- Sumitomo Metal Industries Ltd., Japan's third-largest steelmaker, said it's considering expanding overseas, including in India, after a Nikkei newspaper report said it may form a venture with Bhushan Steel Ltd.

The company hasn't decided on details in the report, Sumitomo Metal said in a statement through the Tokyo Stock Exchange. Nittin Johari, a director at New Delhi-based Bhushan, reiterated today his Feb. 13 comments that the two companies may set up a $1.8 billion factory in the eastern state of West Bengal, India.

"We are working out the details and will take a little more time," Johari said by telephone from New Delhi today.

The blast furnace steelmaking venture in India is slated to start operations around 2015 and expected to be majority-owned by Bhushan, with Sumitomo holding a 30 percent to 40 percent stake, the Nikkei said today. Sumitomo Metal, which is providing technical assistance to Bhushan for another factory in neighboring Orissa state, may join ArcelorMittal and Posco in tapping rising demand in India.

The plant is expected to have annual production capacity equivalent to about 3 million metric tons of crude steel, or about 5 percent of India's output last year, the Nikkei reported, without saying where it got the information. The total investment is estimated at 200 billion yen ($2 billion) to 300 billion yen, the Nikkei said.

Sumitomo Metal shares fell 1.8 percent to 223 yen as of 1:08 p.m. in Tokyo. Bhushan closed 1.8 percent higher at 419.7 rupees yesterday in Mumbai. The stock market in India is closed today for a national holiday.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net Debarati Roy in Mumbai at droy5@bloomberg.net