Eyeing a foray into the cement business, state-run steelmaker joint venture (RINL) has drawn up a plan to set up a greenfield cement manufacturing plant with a capacity of six milion tonne a year (mtpa) in Vizag. The unit will be built through a joint venture route at an estimated investment of Rs 3,000 crore.
RINL is in the process of floating a global tender inviting expression of interests (EoIs) from companies having expertise and experience to be roped in as the partner for entering into the business which holds enough potential in the growing cement market of Andhra Pradesh, a company official told FE.
The plan to venture into the cement business is aimed at proper utilisation of by-products such as fly ash and slag from its 2.9 mtpa steel plant. Almost all the 1.2 mtpa slag produced in the plant is now sold to the local cement manufactures; while fly ash is mostly used for earth-filling.
The company is also enhancing the capacity of the plant to 6.3 mtpa, which is likely to be completed next year. This would mean more slag and fly ash production. “We want to utilise these by-products on our own and that is precisely why we are planning to enter the cement business,” the official said. RINL wants to limit its role in the venture as a minority partner while awarding the majority stake to the proposed partner. This makes sense since the company does not have the necessary experience and exposure to run a cement plant.
“Our steel plant will produce sufficient fly ash and slag to feed a six mtpa cement plant. It generally requires a R500-crore investment to create a one mtpa cement capacity,” he said. Slag, a cementitious material, is mixed with clinker almost at an even ratio to produce cement. Fly ash is mixed with clinker in the 30:70 ratio to produce an inferior variety.
RINL has been toying with the idea of setting up a cement plant for quite sometime now. The company had once floated a tender for the same, but it did not receive positive response. The setting up of the plant would also help the company to enhance its top-line and bottom-line and proper utilisation of the by-products.
Almost all leading cement makers have presence in the Andhra Pradesh market. Complaining shortage in the supply of the building material and its high price, realtors in the state recently threatened to start importing cement from China.
For Updates Check Economy News; follow us on Facebook and Twitter