Indian state-run steel maker Steel Authority of India Ltd (Sail) will explore the feasibility of a joint venture plant in South Africa.

Senior government sources said the steel ministry had asked the company to look into the possibility of such a facility, following the visit of a high-level ministry delegation to South Africa.

While the purpose of the visit was to obtain coal and iron ore from the mineral-rich country, the proposal for the joint venture plant along with assured coal and iron ore supplies cropped up during the discussions.

Sources said SAIL could look at setting up a port-based plant with a capacity of up to 3.5Mt/y, if South Africa allotted it coking coal and iron ore mines.

When contacted, SAIL officials refused to comment.

The venture, sources said, could be a joint one with equity from a nominated South African firm. ArcelorMittal and Tata Steel are already present in the fast growing South African market.

SAIL has only looked at buying raw material assets abroad but never considered a facility, possibly prompted by the fact that its market was mainly within India and there was no necessity to fritter away its resources abroad.

If SAIL sets up a plant in South Africa, finished steel can be easily shipped to India as well as to key markets in Europe and West Asia.

South Africa has emerged as an attractive prospect in steel due to its favourable production turnover that accounts for half of the continent’s output.