JSW Steel puts Rs 35k cr WB project on hold

JSW Steel has put on hold plans to set up a 10 million tonnes steel plant in West Bengal as it has not been able to secure long-term iron ore supplies for the Rs 35,000 crore project.

"It is stalled right now, it's on hold. Unless we are going to fix the iron ore matter, unless we have the visibility of iron ore, we can not move ahead. It's on hold," JSW Chairman and Managing Director Sajjan Jindal told PTI.

JSW is working with the Centre and state government to secure iron ore mining lease, he said, adding, long-term visibility of iron ore is required to begin construction of the plant.

When asked about any timeline for the project, he said: "Nothing (is) in my control. The project is stalled at the moment."

The West Bengal project of JSW, first announced in 2007, has been getting delayed for various reasons. This included a land acquisition row with the state government after Mamata Banerjee-led government took charge in 2011. The issue has now been resolved and land acquisition has been completed.

However, the company has not been willing to move further on any new project, including the ones in West Bengal, without securing either long term iron ore supply agreement or a captive iron ore mine due to its experience in Karnataka.

In Karnataka, the company runs a 10 million tonnes (MT) steel plant but it neither has any captive mine nor any long term iron ore supply agreement and the company has to source the ore from open market.

For more than one and half years now, JSW has been running the Karnataka plant at a reduced capacity due to iron ore crunch in the state.

Currently, all ore in the state gets auctioned due to a Supreme Court direction, thereby increasing the raw material cost for the company.

According to original plan, JSW's West Bengal project was envisaged to have a 10 million tonnes steel plant along with a 1,600 MW captive power plant at a total cost of Rs 35,000 crore, that requires about 4,300 acres of land.

In the first phase, the company had plans to set up a 3 MT steel plant and a 300 MW captive power plant with an investment of Rs 20,000 crore. The first phase was proposed to be financed at a debt-equity ratio of 65:35.

Deallocation of Gourangdih ABC coal block last year by the Coal Ministry is also an issue JSW is facing. The block, allocated to JSW and Himachal EMTA jointly in July, 2009 would have provided coal for the captive power plant of the Bengal plant.

JSW has challenged the deallocation of the coal block in court and the matter is currently sub-judice. PTI