Posco's steel plant in India faces disruption, hampers auto supply chain

Operations at South Korean steelmaker Posco's plant in the Indian state of Maharashtra have been disrupted due to local protests over labour and other issues, hampering the supply chain for automakers.

A local politician leading the protests said they have blocked employees and goods from entering the plant and will continue until Posco heeds to some of their requests which include giving employment preference to local workers, raising the wages of temporary employees and making them permanent.

Supply of steel from Posco's Maharashtra plant has been seriously affected and production for carmakers "is likely to come to a standstill" if the issue is not resolved soon, the country's top auto industry body said in a March 10 letter addressed to the state's chief minister.

"In view of this, production activity at the facilities of vehicle manufacturers in India, is likely to come to a standstill," SIAM said, adding that Posco is one of the major suppliers of steel to the industry.

Automakers including Maruti Suzuki, India's top carmaker by sales, Hyundai Motor, Kia Motors, Tata Motors and Mahindra & Mahindra source steel from the Posco plant, sources said.

These companies, which together account for over 80% of India's automobile production, did not respond to requests for comment. The Maharashtra chief minister's office also did not respond.

SIAM said the disruption comes at a time when companies are still recovering from the impact of COVID-19 and this could be a major setback for the economy.