Decks cleared for development of four greenfield steel plants

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New Delhi | Published: April 29, 2015 3:11:13 AM

SAIL chairman CS Verma said the Dilli-milli facility will have 6 mtpa capacity.

Decks have been cleared to kick-start the government’s ambitious plan of developing four mega greenfield steel plants of 6 mtpa each through the SPV route, at an estimated combined investment of $24 billion.

An initial pact between state-run Steel Authority of India (SAIL) and the Chhattisgarh government is set to be inked for one of these plants in the presence of PM Narendra Modi next month, during his visit to the state.

The UPA-II government had conceived the idea of greenfield steel plants in which PSU miner NMDC, the lead partner and minority stakeholder, along with state industrial development corporations would create the necessary infrastructure for these units, including the acquisition of land.

Once the infrastructure is ready, the project would be handed over to potential investors through a global tender for setting up and running the plants. However, the plot changed a bit with slow progress on the part of NMDC. Last November, the government decided to give the job of infrastructure creation to SAIL and RINL, besides NMDC. The idea was to fast-track the setting up of four mega steel plants in Chhattisgarh, Odisha, Jharkhand and Karnataka.
SAIL was given the task to work for the Chhattisgarh SPV, RINL for the Odisha SPV while NMDC for the remaining two. The state-run firms have also been given the option of staying put on the project. Though SAIL and RINL might do just that along with a partner having sound technology of steelmaking, NMDC might exit from the projects, sources said.

After the mandate was given, SAIL started working steadily and after a series of discussions, Dilli-milli area in the Bastar district of Chhattisgarh was chosen as the location for the plant.

Steel minister Narendra Singh Tomar told FE that Modi would go to Chhattisgarh in mid May and an MoU between SAIL and Chhattisgarh Industrial Development Corporation would be signed. It generally requires $1 billion investment for creating 1 mt steel capacity.

SAIL chairman CS Verma said the Dilli-milli facility will have 6 mtpa capacity. SAIL would be the lead investor, but there will be a third partner.

Aimed at clearing bottlenecks for private projects, the SPV route was first mooted by the previous government against the backdrop of two global players, Posco and ArcelorMittal, pulling out of their mega steel projects, as a step towards achieving 300 mt capacity by 2025.

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