Indigenous steel plant to tap iron ore, curb steel imports

An Ultra Mega steel Plant to be set up by the Steel Authority of India Limited (SAIL) and National Mineral Development Corporation (NMDC) will have the capacity to produce 3 million tonnes of steel annually

The Dollar Business Bureau Iron-ore-The-Dollar-Business In order to tap India’s iron ore resources, state-run companies Steel Authority of India Limited (SAIL) and National Mineral Development Corporation (NMDC) on Saturday agreed to set up an Ultra Mega Steel Plant (UMSP) in Chhattisgarh’s Bastar region. A memorandum of understanding (MoU) was signed on Saturday between the two companies in presence of Prime Minister Narendra Modi. The Prime Minister said the move will help India to curb its steel imports. “…Send iron out and get steel from outside. This would go on. But now this has to stop. We will make steel from the iron ore,” Modi said, adding that by utilizing indigenous resource of iron ore, India can be able to export steel in the international market. The project, with the capacity to produce 3 million tonnes of steel annually, will be set up in Bastar region through SPV (special purpose vehicle) as a joint venture company including SAIL and NMDC Ltd with partnership of 74% and 26% respectively, the Chhattisgarh government said in a statement. The iron ore mining will be operated by a venture formed by SAIL, NMDC and the Chhattisgarh Mineral Development Corporation. The total project cost is estimated at around Rs 18,000 crore. For the transportation of iron ore and other raw material to the proposed steel plant, the NMDC signed a separate agreement with SAIL, IRCON and the Chhattisgarh government to construct a railway line between Jagdalpur and Rowghat. Besides, the NMDC and the Chhattisgarh government have also agreed to set up a slurry pipeline and pellet factory at Nagarnar, around 80 km from the proposed steel plant. The Bastar project is among four new steel plants that the present government has decided to set up in the mineral-rich states of Odisha, Jharkhand, Chhattisgarh and Karnataka. The domestic steel industry has been facing the challenge of low demand and cheaper imports. India aims at producing up to 300 million tonnes of steel by 2025. But issues such as the ban on iron ore mining in Karnataka and Goa and land acquisition problems have led to delay in a number of planned projects in both the public and private sectors. During his visit to Rourkela last month, the Prime Minister exhorted the domestic steel industry to raise its production capacity to narrow the gap with China. According to a recent data of the World Steel Association, India produced 7.95 million tonnes of steel in March, while China's output was 69.5 million tonnes. A government data said that India’s steel imports jumped to 0.8 million tonnes last month, up 51.6% as compared to the figure recorded during the same period a year ago. The World Steel Association has forecast that global steel use will increase by 0.5% to 1,544 MT in 2015. Further in 2016, the demand is expected to grow by 1.4% and will reach 1,565 MT.  

May 9, 2015 | 5:06 pm IST.

The Dollar Business Bureau - May 09, 2015 12:00 IST