Lnj To Set Up Graphite Electrode Unit Abroad

The Rs 1,700-crore LNJ Bhilwara group is planning to put up a 30,000 tonne per annum graphite electrode project abroad at an estimated cost of Rs 500 crore.

"We have shortlisted three countries for the project -- Egypt, Tunisia and Thailand. We will arrive at a decision in another three-four months," LNJ Bhilwara group chairman Ravi Jhunjhunwala said.

HEG Ltd, the Rs 552-crore flagship of the group, has a 30,000 tonne facility to produce graphite electrodes at Mandideep near Bhopal in Madhya Pradesh. It is the largest integrated graphite electrode plant in South Asia.

The company also operates one of the largest single location plants in the world. Graphite electrodes are used in electric arc furnaces to make steel.

The company exports over 80 per cent of the graphite elctrodes it produces. Its clients include the Usinor Group of France, L N Mittal-promoted Ispat International and Posco of South Korea.

According to Jhunjhunwala, out of the three countries shortlisted by the group, Egypt is most likely to be the chosen country on account of its low power cost (power accounts for 26 per cent of the total cost of production) and the low freight charges to the big markets of Europe and the US.

"Power cost is just 2.9 cents per unit in Egypt and the rate has not changed in the last 8 years. Moreover, gas prices have been capped at 25 per cent there for the next eight years. This could mean a similar cap on power costs," Jhunjhunwala said adding: "The freight cost from Alexandria to Rotterdam is one-fourth of the freight from Mumbai to Rotterdam. Freight cost to the US is half and 30-35 per cent cheaper for the far east."

Jhunjhunwala also disclosed that the 30,000 tonne project could either be implemented at one go or in two modules of 15,000 tonne each.

The group is also considering splitting the project into two and implementing the first two manufacturing processes at Mandideep (near Bhopal) itself and the other two abroad. "Land is available at Mandideep. We can have the first two processes of greening and baking, which are not power intensive, in India with some rationalisation of manpower. The remaining two processes, baking and machining, which are power intensive, can be done abroad to take advantage of the lower power costs," Jhunjhunwala said.

Though the group would save Rs 30-40 crore by splitting the project in such a fashion, Jhunjhunwala said that the cost of production would go up slightly on account of transporting the semi-finished electrodes to the overseas plant.