Tata Steel plans 2nd phase expansion of Kalinganagar plant

By: | Updated: September 29, 2016 3:52 PM

Tata Steel is planning to initiate second phase expansion at Kalinganagar plant in Odisha to double its capacity to 6 mtpa, but has no proposal to set up another green-field steel plant in immediate future.

Tata Steel, which has 2,000 acres of land in Kalinganagar, is already in the process of getting another 1,000 acres, Narendran said, adding that with 3,000 acres of land, the newly set up steel plant would even be in a position to raise capacity up to 15-16 mtpa in a phased manner. (Reuters)Tata Steel, which has 2,000 acres of land in Kalinganagar, is already in the process of getting another 1,000 acres, Narendran said, adding that with 3,000 acres of land, the newly set up steel plant would even be in a position to raise capacity up to 15-16 mtpa in a phased manner. (Reuters)

Tata Steel is planning to initiate second phase expansion at Kalinganagar plant in Odisha to double its capacity to 6 mtpa, but has no proposal to set up another green-field steel plant in immediate future.

“Sometime in next six months a proposal will be sent to our board for its approval to start the second phase work at Kalinganagar, while the focus now is to achieve full 3 mtpa capacity in first phase fast,” Tata Steel MD (India and South East Asia) T V Narendran said.

He also said that Kalinganagar plant, set up at an investment of over Rs 25,000 crore, is likely to reach break even by the end of this fiscal.

After achieving the first phase rated capacity of 3 mtpa, second phase expansion can be taken up, Narendran said.

However, the steel maker has no plan to set up a third green-field steel plant in the country in near future, and would rather concentrate on raising capacities of its existing plants at Jamshedpur and Kalinganagar, the Tata Steel MD told reporters here.

Noting that Jamshedpur plant’s present capacity stands at 10 million tonnes per annum (mtpa), he said its capacity would go up to 11 mtpa as an approval has been obtained to add one more million tonne.

Thus, both Jamshedpur and Kalinganagar would churn out up to 17 mtpa post-expansion.

Tata Steel, which has 2,000 acres of land in Kalinganagar, is already in the process of getting another 1,000 acres, Narendran said, adding that with 3,000 acres of land, the newly set up steel plant would even be in a position to raise capacity up to 15-16 mtpa in a phased manner.

Despite challenges before the steel sector both at home and abroad, expansion ventures would continue to raise steel making capacity in India as demand in the country is projected to rise by 5 to 6 per cent, he said.

Referring to raw materials, he said while Kalinganagar plant is iron ore self-sufficient, the steel maker at times procures iron ore from Odisha Mining Corporation (OMC) whose mine is barely 20 to 30 km from Kalinganagar.

Price of iron ore is not much different from the cost involved in mining and the company opts for either – depending on economies.

He said Tata Steel also intends to participate in next round of auction of iron ore mines as it seeks to expand.

While 65 per cent of the coking coal requirements are met through imports, the rest 35 per cent is drawn from Tata’s own mines, Narendran said, adding the steel maker would continue to import keeping in mind the expansion plans and future requirements.

Regarding export of products from Kalinganagar, Narendran said soon after commencing commercial production, the new unit has already started export of Ferroshots and hot rolled coils.

Tata Steel’s Jamshedpur plant is exporting to South East Asian countries and Kalinganagar unit will also export products manufactured by it to these countries, he said.

Earlier this month, Tata Steel flagged off its first consignment of hot rolled steel export rake to Nepal from Kalinganagar.

In the first export consignment, around 3,000 tonne HR coils are being exported to key customers in that country.
Narendran said India is one of the exciting markets as far as growth of demand is concerned as the cost position of steel industry is good.

There are supports and safeguards in the form of import duties and anti-dumping duties, he said, adding that Indian steel industry is well positioned amidst growing demand.

On the question of Minimum Import Price (MIP), Narendran said it is helpful in giving the industry some respite against cheap imports and the industry appreciates this support from the government.

But, the prices in the country is determined by demand- supply scenario.

The whole issue, he said, needs to be treated in a holistic and comprehensive manner.

On the projects at Gopalpur, the Tata Steel MD said that the ferro-chrome plant being constructed at the site and is expected to be commissioned in November, while work on SEZ is also gaining pace.

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