Essar to join hands with NMDC for slurry pipeline project

The project that would entail an investment of about Rs 10,000 cr would also include two iron ore pellet plants

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Essar Steel will join hands with the National Mineral Development Corporation (NMDC) for the 450-km underground 15 million tonnes per annum slurry pipeline from Bailadila in Chhattisgarh to Visakhapatnam in Andhra Pradesh.

The project that would entail an investment of about Rs 10,000 crore would also include two iron ore pellet plants. Public sector iron ore miner NMDC and Rashtriya Ispat Nigam Ltd (RINL), the two state-run firms under the administrative control of the Steel Ministry, had inked agreement to form a joint venture with 26% equity each to make the project a win-win for both. The joint venture had offered 16% stake each to Essar Steel, Kudremukh Iron Ore Company (KIOCL) and Jindal South West (JSW).

Though the Essar officials denied comment on the issue, a top NMDC official associated with the project told Business Standard that the company (Essar) had given in-principle consent to be a part in the venture. The other modalities are being worked out, he said. While JSW, another potential customer of NMDC, could not be contacted, official said the KIOCL had given its approval earlier. The Essar steel joining the project would add significance as the company had expertise in slurry pipeline project. The company has been operating a 267-km slurry pipeline to transport iron-ore fines from its Bailadila plant to Vizag.

The pipeline has been passing through the interior areas of Bastar region that is notorious for frequent strikes by Naxal militants. The rebels had damaged Essar's 267 km-long slurry pipeline in July 2010. The complex returned to full production after a long time. The proposed pipeline would be underground that would not be vulnerable for the militant attack. The project is important for the Essar, the global integrated steel maker. It would provide a stand-by arrangement for the company as the rebels had been frequently damaging its pipeline.

The first phase of 135 km connecting Bailadila and Nagarnaar (Jagdalpur) will be completed by 2018 and the second phase of 310 km thereafter in a year or two. The pipeline would pass through three states that include Chhattisgarh, Odisha and Andhra Pradesh would be routed through the national highways to avoid insurgency problems.