Essar ramps up Hazira steel unit capacity

Essar Steel today said it has ramped up the capacity of its Hazira steel plant to 10 million tonne per annum and its total investment of $7.5 billion for creation of this facility was less than half the industry standard.

"It took $7.5 billion to create a 10-million tonne fully-integrated steel-making facility at Hazira. The investment includes raw material beneficiation, steel-making and distribution. The industry standard is more than twice for putting up a 10-million tonne capacity alone," Essar Group Chief Executive Prashant Ruia told reporters here today.

The plant will have the capability to manufacture steel at a low cost through a series of cost-cutting measures.

Essar Steel began its journey at Hazira in 1989 with a 0.9-million tonne sponge iron-making plant and in the passage of 22 years, gradual expansion of capacity has made the facility one of the top four flat steel producers in the world at a single location.

"We would like to dedicate this plant to the nation. When I first ventured into Hazira, it was my desire to put India on the global steel map and today that dream has come true. Our world-class steel complex is a testament to the hard work put in by the Essar family and our small contribution to the steel industry and India's growth story," Essar Group Chairman Shashi Ruia said in a statement.

The company is already among the lowest cost steel producers in the world through raw material and energy securitisation, Prashant Ruia said, adding that operational efficiencies, throughput enhancement and asset optimisation would move it further down the cost curve.

The Hazira facility combines a DRI, blast furnace and corex technology for making iron, which is later used in the steel-making process through electric arc furnaces. The advantage of having such a combination is that there is no wastage of gas generated through the corex iron-making technology.

As a result, the company generates almost 45% of its captive requirement in the gas-based DRI. Essar Steel has a long-term contract with ONGC for the rest of the gas requirement.

"The cost of labour for per tonne steel-making is just $8.2 per tonne. This is only second to $5.71 for Baosteel. Even Posco's labour cost for per tonne steel production is higher than us at $9.22," Ruia said.

Ruia said the plant was expected to run at 80-85% capacity in the next fiscal and 70-75% of the output would be value-added products, the demand for which was on the rise on account of the fast-growing automobile and FMCG sectors.