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SAIL proposes shore-based steel plant in Odisha for Rs 15,000 crore

Jayajit Dash & Nirmalya Behera/ 14 Jan 19 | 07:45 PM

SAIL plans a second steel plant in Odisha.

State-owned SAIL plans to set up a shore-based steel plant with a capacity of three million tonnes per annum (mtpa) in Odisha with an estimated investment of Rs 15,000 crore.

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The plant would be SAIL’s second in the state after its Rourkela unit, which has a hot metal capacity at 4.5 mtpa. "SAIL has written to the state government, evincing an interest of establishing three million steel plant in the coastal part of state. They have requested for about 3000 acres of land to put up the plant. The investment may be around Rs 15000 crore", said an Odisha government source.

The location hasn’t been finalised, but SAIL believes a unit on the coast could optimize costs, streamline operations and ramp up its bottom line.

SAIL's ramp up from 1 mtpa to 4.5 mtpa at Rourkela was achieved at an investment of Rs 12,000 crore. Prime Minister Narendra Modi had dedicated the expansion to the nation in 2015.

The company has announced plans to invest Rs 41,000 crore more on the Rourkela unit to scale up capacity to 10 mtpa.

Separately, SAIL is understood to be evaluating options for locating its proposed joint venture (JV) steel plant with ArcelorMittal in Odisha.

In May last year, SAIL had written to Odisha's industries secretary Sanjeev Chopra, evincing interest to locate the auto grade steel facility in the state.

"The decision of site selection for the proposed unit would be taken based on the advice of relevant experts, and after conducting due diligence taking into account the location, availability of manufacturing inputs, infrastructure and facilities as well as incentives and benefits made available by the respective state government. We appreciate your proposition and would keep Odisha as a prospective site to be considered for the proposed unit", the letter from SAIL stated then.

Both the joint venture (JV) partners have been scouting for a suitable location for the project. ArcelorMittal and SAIL entered into memorandum of understanding (MoU) in May 2015 to explore the possibility of setting up an auto grade steel manufacturing facility. The size of the deal is estimate at Rs 15000 crore. Initial capacity of this plant is envisaged at 1.5 million tonne per annum (mtpa) but it can be expanded to 2.5 mtpa.

Odisha's case for hosting the proposed auto grade steel facility seems compelling since inputs for the plant are to be sourced from the new hot strip mill at SAIL's Rourkela unit, thus making the entire value chain indigenous.

The proposed JV plant will construct world-class facilities for manufacturing automotive steel that will offer technologically advanced steel products for India’s rapidly growing automotive sector.

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