May 25, 2022

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Exclusive: Posco’s steel plant in India faces disruption, hampering automobile source chain

NEW DELHI (Reuters) – Functions at South Korean steelmaker Posco’s plant in India’s western point out of Maharashtra have been disrupted by protests above labour and other challenges, police and sources told Reuters, hampering the source chain for automakers.

FILE Picture: A person walks earlier a brand of steelmaker POSCO at the firm’s headquarters in Seoul, South Korea October 25, 2010. REUTERS/Truth of the matter Leem

A politician primary the protests said they blocked entry to the plant for staff and merchandise, and will continue until Posco heeds calls for these kinds of as work choice for locals, bigger wages for momentary staff members and measures to make them permanent.

Supply of metal from Posco’s Maharashtra plant has been hit and carmakers’ manufacturing “is most likely to occur to a standstill” if the issue is not resolved before long, India’s prime auto marketplace system told the state’s main minister in a March 10 letter.

“The blockage is…creating disruption in the source chain and is ensuing in scarcity of essential vehicle components and parts,” the Modern society of Indian Auto Makers (SIAM) reported in the letter, reviewed by Reuters.

“In perspective of this, output action at the facilities of auto makers in India is probably to come to a standstill,” SIAM reported, introducing that Posco is one of the indsutry’s big suppliers of metal.

Reuters could not independently validate the extent of disruption at Posco’s plant.

Posco claimed the situation experienced no impression on metal manufacturing, but interruptions prompted to its logistics arrangements blocked the flow of merchandise and products with the plant.

Protesters’ requires contain the award of contracts for transportation and distribution of steel scrap, Posco stated, but it did not say what measures it would just take or the extent of financial and operational influence on its organization.

Automakers this kind of as Maruti Suzuki, India’s best carmaker by product sales, Hyundai Motor, Kia Motors, Tata Motors and Mahindra & Mahindra source metal from the Posco plant, sources mentioned.

These corporations, which together account for far more than 80% of India’s automobile output, did not answer to requests for remark.

The Maharashtra main minister’s workplace also did not reply.

SIAM mentioned the disruption comes as businesses are nevertheless recovering from the coronavirus disaster, and could prove a main setback for the financial system.

“Such incidents would also seriously tarnish the picture of India as a most popular location for financial commitment,” SIAM stated in the letter, also despatched to the central government to request its urgent intervention.

The protest is the 2nd occasion in recent weeks that a world agency has confronted challenges in India’s top rated organization state.

In January, General Motors mentioned Maharashtra’s shift to block the U.S. automaker from shutting its plant and leaving India defied the state’s business enterprise pleasant graphic and sent a “concerning message” to long run traders.

Chandrashekhar Khanvilkar, the politician primary the Posco protests advised Reuters the other requires involved choice for nearby firms in delivering transport, canteen and backyard maintenance companies, as perfectly as in product sales of steel scrap.

“We are not permitting transport vehicles and workers to enter the manufacturing unit,” Khanvilkar mentioned, introducing that the protests had run considering that March 2. “We will go on the agitation peacefully till the organization agrees to at least a couple of of our 18 needs.”

As many as 30 police now guard the plant, up from an original determine of 6 or seven, law enforcement official Pradeep Deshmukh informed Reuters.

Reporting by Aditi Shah and Rajendra Jadhav More reporting by Joyce Lee in Seoul Editing by David Evans and Clarence Fernandez