Not able to take off its 12 million tonnes plant in Odisha, global Steel giant Posco is likely to shift its first Finex plant to Kalinganagar, in the state from Pohang, South Korea after a definitive pact with homegrown steelmaker Mesco, which is scheduled by August.
“We have already signed an initial pact with Posco for shifting of its patented Finex technology plant at Mesco premises at Kalinganagar in Jajpur. The shifting should begin in the next two to three months post a definitive pact with POSCO, which is scheduled by August,” Director Finance, Mesco, Natasha Singh Sinha said.
She said Posco will have a minority share in the joint venture and the discussions are on to finalise the equity as well as the exact location for shifting of the plant.
“The shifting will be done at Maithan Ispat or MSIL, which is currently under discussion because both the possibilities exist. They won’t have to start from scratch, acquire land and face earlier issues. We are offering minority stake that has not been announced yet. We are discussing on equity. This is clear that they will have minority and that they know,” Sinha said.
She added the final numbers would be announced by August.
Mesco Steel through its arm Mideast Integrated Steels Ltd (MISL) had set up a steel plant of 1.2 MT per annum (MTPA) capacity in Kalinganagar, Odisha, while in April this year it acquired Maithan Ispat for Rs 1,160 crore.
Posco, which has earlier this year signed an initial joint venture pact “with us will start dismantling the unit and start shifting it here in two to three months,” she added.
Posco’s patented Finex is an iron making technology, which has “significant potential to reduce operating cost” as it eliminates the reliance on expensive coking coal.
The Korean major had signed an agreement with state-run Steel Authority of India for setting up a steel unit using the same technology, but it never took off owing to shareholding issue as it demanded a majority share.
However, Sinha said, Posco would be satisfied with a minority stake in its joint venture with Mesco for relocating the plant at Kalinganagar in Odisha. The Pohang plant has six lakh tonnes per annum capacity.
When contacted, a Posco spokesperson told PTI, “It is not fixed yet (shifting schedule). It will take more time to discuss.”
Both Mesco and Posco had signed a pact in March and the Indian firm had then said that the Korean giant will have 26 per cent equity in the JV.
As a Finex plant requires a lot of oxygen and power, Mesco Steel has already initiated talks with some companies for setting up auxiliary plants on the JV route, Sinha said adding these include Tata Power and an Italian firm. The Finex plant during operation would need a running 100 MW captive power plant and an oxygen plant of 1,000 tonnes per day capacity.
Sinha said once the plant is shifted here it will cut Mesco’s hot metal production cost significantly.
She added that the step of shifting Posco plant is part of Mesco’s expansion drive to take its capacity to 4.5 million tonnes (MT) in the next 3-5 years with an investment of Rs 13,500 crore.
“Capacity of MISL steel plant in Jajpur will be raised to 3.5 MTPA from the existing capacity of 1.2 MTPA, while 1 MTPA capacity will be achieved at recently acquired Maithan Ispat,” Sinha said.
Mesco Steel operates two blast furnaces in its plant at Kalinganagar and the hot metal is cast as pig iron.
The company also operates an iron ore mine in Barbil region and has another iron ore mining lease at Malangtoli in Odisha.
Posco now has 38 million tonnes per annum steel-making capacity. It had been eyeing the Indian market for long.
The South Korean major earlier this month announced to put on hold its $12 billion steel project in Odisha due to delays in various regulatory approvals over the past decade.
“We are tentatively suspending the Odisha (India) project due to lack of any progress,” Posco Chairman and CEO Kwon Oh Joon has said.