Shyam Steel Launches Greenfield Steel Unit in West Bengal

Shyam SEL and Power Limited (Shyam Steel) (Kolkata, West Bengal), a flagship company of the Shyam Group of Industries, has announced plans to launch the first phase of a proposed greenfield integrated steel and power plant in Purulia, West Bengal. According to Industrial Info Resources (Sugar Land, TX), the first phase of the project is expected to be completed by the first quarter of 2011.

In February 2008, Shyam Steel signed a memorandum of understanding with the West Bengal Industrial Development Corporation and West Bengal Mineral Development & Trading Corporation to build a steel plant with a capacity of 1.1 million tons per year in Raghunathpur in the Purulia district and another facility with a capacity of 600,000 tons per year in Kharagpur. The company had initially planned to invest a total of $415 million in the first phases of both the projects. Because of the economic slowdown, however, Shyam Steel decided to defer the Kharagpur project and reduce the investment for the Purulia project. The company now intends to revive the Kharagpur project and start producing steel products for commercial purposes only when market conditions have become more conducive for the venture.

The Purulia project, designed to have a total capacity of 1.1 million tons per year of sponge iron and pellets and a captive power plant of 1,000 megawatts (MW), will require a total investment of nearly $750 million. In the first phase, the plant will produce 250,000 tons per year of direct reduced iron and 250 MW of captive power. The investment required for this phase has been reworked to $250 million, compared with the initially budgeted amount of $330 million. Shyam Steel had initially planned to produce sponge iron, pellet, billet and thermo-mechanically treated bars at the Purulia facility, but the unit will now mainly function as a captive facility for the company's existing steel-producing plant in Durgapur, West Bengal.

The Purulia project will generate employment for 8,500 people, and the entire facility will be spread over an area of 1,500 acres, out of which about 100 acres has already been acquired privately. Shyam Steel proposes to purchase another 150 acres privately, and the remaining land acquisition process is expected to be completed by March 2009. The government has assured the firm that it will provide the remaining area of land required for the project. Iron ore for the steel plant will be procured from mines in Orissa. Whether feedstock for the power plant will be procured from the coalmines at Jagannathpur remains to be seen, as the allocation of coal blocks is currently being awaited. The company has sought 480 million tons of coal reserves from the state government. The project has obtained all approvals necessary from the India's Ministry of Environment and Forest.

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