Essar Steel Plans $4.2 Billion Steel Plant in Karnataka

Essar Steel Limited (Hazira, Gujarat, India) recently unveiled plans to commission a $4.2 billion steel plant with a production capacity of 6 million tons per year in Bagalkot, Karnataka. According to a report from Industrial Info Resources (Sugar Land, TX), the state government of Karnataka has given clearance for the venture.

The project will be set up in two phases. The first phase, with a production target of 3 million tons per year, includes the construction of a coke-oven plant, a battery unit and a pellet plant. At the end of the second phase, production capacity is expected to reach 6 million tons per year. Details of the second phase of the project have not yet been disclosed. Essar Steel plans to lease an iron ore mine in the vicinity to ensure a steady supply of raw material for the project and is in talks with the state government about this.

Essar Steel has a current steel manufacturing capacity of 9 million tons per year. The company is targeting an additional capacity of 25 million tons per year by 2012. Several new projects within and outside India are being envisaged, while existing facilities are being expanded to increase production. There are plans to expand the Hazira project in Gujarat, which upon completion will double its current capacity of 4.6 million tons per year. Two other 8 million-ton-per-year projects currently feed the main plant at Hazira: a beneficiation unit in Chhattisgarh and a pellet plant in Andhra Pradesh.

The firm is planning to set up a 6 million-ton-per-year integrated steel plant in Paradeep, Orissa. The project will be set up in two phases. In the first phase, the firm will develop an iron ore beneficiation plant with a capacity of 8 million tons per year in Dabuna, a pellet unit in Paradeep, and a 253 km underground pipeline to supply raw material slurry to the pellet plant. An iron ore induration machine is being procured from Metso Minerals (Gurgaon, Haryana) at a cost of $20 million. The machine is expected to be installed at the pellet plant by 2010 and will have a feed rate of 700 tons per hour. The proposed 6 million-ton-per-year integrated steel plant and auxiliary and support units will be commissioned in the second phase of the project. Apart from having access to the rich iron-ore deposits in the region, the plant will also be able to utilize the facilities at the Paradeep Port for importing raw materials and exporting finished goods.

The Karnataka State High Level Clearance Committee recently cleared 10 new manufacturing projects in the state, with investments in the iron and steel sectors being the highest at $14.61 billion. The state government has also decided to offer mining licenses to companies investing in the steel sector. Subsequent to this decision, several companies, including NMDC Limited (Hyderabad, Andhra Pradesh) and Kudremukh Iron Ore Company Limited (KIOCL) (Mangalore, Karnataka), have come up with proposals to set up steel plants in the state.

NMDC announced plans to establish a 10 million-ton-per-year integrated steel plant in the state, with an initial capacity of 2 million tons per year. The company, however, has requested the state government for access to adequate mineral and water resources to realize the full potential of the project.

KIOCL has revealed plans to set up a steel plant in Karnataka at an estimated cost of $1.84 billion to $2.04 billion. The company's current leased mineral resource in Tumkur will last five years, following which the firm plans to lease a bigger mine. The company also plans to revive the pellet and pig iron plant and its spun pipe plant located in the state.

Another steel company, JSW Steel (Mumbai, India), is currently expanding its plant in Vijayanagar to increase production capacity from 7 million tons per year to 10 million tons per year. Work will be completed by 2010, making it the first single location 10 million-ton-per-year plant in the country. Other iron and steel projects in the region include a $2.01 billion project by Aaress Iron and Steel Limited (Bellary, Karnataka) and a $1 billion venture by Mineral Sales Private Limited, a part of the Baldota Group (Hospet, Karnataka), a leading iron ore mining firm, to set up a 1.3 million-ton-per-year plant in Koppal to manufacture special and alloy steel long products.

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