JBIC and three Japanese banks back $285mn India electrical-steel venture

Japan Bank for International Cooperation said it signed a loan agreement of up to $171mn with JSW JFE Electrical Steel Private Limited, known as J2ES, on September 17. The loan runs alongside a syndicate with Mizuho Bank, MUFG Bank and Sumitomo Mitsui Banking Corporation, taking total syndicated financing for the project to $285mn. J2ES is the joint venture JFE Steel formed with India's JSW Steel Limited in 2024, and the money is earmarked for equipment at a plant in Karnataka state that will manufacture and sell high-grade grain-oriented electrical steel.

JBIC frames the loan around India's steel and power fundamentals. The country is the world's second-largest steel consumer after China, and rising power demand, wider adoption of renewable energy and pressure to make transformers more efficient are pushing up demand for grain-oriented electrical steel, the material used in low-loss transformer cores. That demand curve is the commercial case for building capacity inside India rather than shipping the material in.

The financing also lines up with JFE Group's eighth medium-term management plan, covering the three years to 2027, which calls for deepening what the company terms "insider-type" ventures with top-tier partners in overseas growth markets. JFE Steel is using the Karnataka joint venture to capture growing Indian demand for grain-oriented steel through local production with JSW Steel, its Indian partner.

JBIC, under its governor, said the financing supports the international competitiveness of Japanese industry and, by backing production of low-loss transformer-core material, also contributes to global environmental protection. The release does not disclose a production capacity figure for the Karnataka plant, a start-up date, or how the remaining $114mn of the syndicate is split among Mizuho Bank, MUFG Bank and Sumitomo Mitsui Banking Corporation.