Frustrated Kalyani Steel hunts for site in West Asia

Various hurdles force company to consider a factory in Oman or Saudi Arabia

Kalyani Steel, part of the $2.5-billion Kalyani group, is considering setting up a factory in West Asia with cheap energy and land near a port, Managing Director R K Goyal told Business Standard.

“The plant can be anywhere. We are evaluating several countries. It can be in Saudi Arabia, Oman or even Iran, if the political situation improves there. Our plan is currently at the study level,” he said. Pune-based Kalyani Steel makes forging and engineering quality carbon and alloy steels using blast furnaces.

“Land at the port can help to directly unload the material from the ship into the bunkers, resulting in no handling cost,” Goyal said. In fact, the plant could be automated to cut number of labourers also, he said.

The plant would have a capacity of at least five million tonnes a year if it makes flat products (made using flat rolls), one million tonnes if it makes long products (made using hot rolls or forging), Goyal said without divulging investment details. Though demand for the company’s products comes mainly from within the country, regulations have forced it to look to West Asia for a site, added Goyal.

“Today, getting land, water and iron ore has become almost impossible in India. For manufacturing steel, the next important raw material is coking coal or coke, which is already imported. You have to import coking coal, iron ore you are not getting here, land is a problem, water is a problem, why then should one set up a plant in India?”

The company has iron ore mines in the Bellary-Hospet region of Karnataka, running below capacity due to ore shortage. The company will take a final call after a stable government is in place in the second half of this year. “We are waiting for a stable government. If the regulatory issues are sorted out, we don’t mind putting it (plant) up here (India) only because the basic steel demand lies here” said Goyal.