Essar to start phase-1 of 13K cr expansion project next month

Ruias-led Essar Steel today said it will commission the first phase of its Rs 13,000-crore expansion project by the end of next month.

"The first phase of of our expansion--1.8 million tonne per annum (MTPA)-- will be commissioned by June-end which is in line with our target of having a run rate of 8 MTPA by March 2011," Essar Steel Business Group CEO Malay Mukherjee told reporters on the sidelines of a FICCI Steel Summit here.

The company has an installed annual production capacity of 4.6 MTPA in Hazira, Gujarat. Earlier the company had set a target to install an additional 5 MTPA production line by March 2010. Asked about the delay in setting up the expanded capacity, Mukherjee said, "The expansion project is more or less on track." The company is working to install a 10-MTPA capacity.

  Moreover, the company is keenly looking at merger and acquisition opportunities overseas for expanding its business, Mukherjee said.Going for raw material integration, Essar Group recently acquired mining properties abroad.

 Essar's new steel plant will be based on the traditional blast furnace and the eco-friendly COREX furnace route of steel making. Its present mill is an electric arch-based unit.

While going with the traditional blast furnace route the firm will need coking coal besides iron ore to produce steel. In the COREX route, Essar will have to procure non-coking coal with the advantage of using the emitting gas to generate power.

"The company may import some of its coal requirement to feed the expanded capacity this fiscal," Mukherjee said.

The company at present buys iron ore from state-run NMDC. In addition, it has been allocated iron ore blocks in Jharkhand and Chhattisgarh. Besides Gujarat, the company is in the progress of setting up steel plants in Orissa, Chhattisgarh and Jharkhand. In Orissa, Essar is setting up a 12-MTPA pelletisation plant at the site near Paradeep port. Size of the proposed units in Chhattisgarh and Jharkhand are yet to be finalised.

Essar Group is also expanding its production capacity at its unit in Canada. Also, it is setting up a pelletisation plant in the US.

The conglomerate aims to have an annual steel making capacity of 20-25 million tonnes. The Algoma unit in Canada has an annual production capacity of 4-MTPA. In USA, the company is in the process of setting up a pellet plant.