Raw material hurdles for JSPL's mega plans

Company still awaiting captive iron ore mines, PL for CTL block

As Jindal Steel & Power Ltd (JSPL) readies to commission its envisaged six million tonne greenfield steel plant near Angul by 2016, lack of adequate captive iron ore linkages may force the company to go for costlier raw material from external sources.

JSPL's applications for captive iron ore mines to feed its mega steel plant are still pending with the state government. Operating the steel plant at its full six million tonne per annum (mtpa) capacity will have an estimated iron ore requirement of 12 million tonne every year.

"We have recently commissioned our steel melting shop (SMS). Our plant will now have a capacity to produce 2.5 mtpa steel. JSPL is getting iron ore from Thakurani mines and TRB (Tantra, Raikela and Bandal) mines. If required, we will also source the raw material from our captive mines in Chhattisgarh”, said a company source.JSPL is investing Rs  29285 crore on the steel project that also includes a 900 Mw captive power plant (CPP).

"Our second phase expansion wherein we will upgrade steel-making capacity to six mtpa is expected to be completed by 2016. Earlier this month, we had commissioned our SMS, the second largest in Asia”, Naveen Jindal, JSPL chairman said after meeting the Odisha chief secretary.

On the proposed coal-to-liquid (CTL) project, Jindal said, “Our project report is ready. We hope to sign memorandum of understanding (MoU) with the state government by the end of this year. The company also expects to get prospecting license (PL) soon for the Ramchandi coal block (allocated for the CTL project).”

Jindal has been frequently meeting Odisha chief minister Naveen Patnaik and top state officials for the past few months presumably to secure ore linkages for his projects whose combined investments exceed over rupees one lakh crore.

JSPL's ambitious CTL project planned at an investment of Rs  60,000 crore was yet to show any sign to take off.

The Odisha government had recently decided to keep on hold the processing of Ramchandi promotional coal block in the light of the ongoing probe by the Central Bureau of Investigation (CBI).The Parliamentary Standing committee on steel and coal had also questioned the basis of allocation of the two CTL blocks in Odisha (the other being north of Arkhapal-Srirampur allotted to Tata Sasol) with estimated reserves of over 3000 million tonne to two privately run firms.

The CTL project proposed at Durgapur in Angul district, was to be executed by Jindal Synfuels Ltd, a JSPL subsidiary. Though the state government had readied the draft MoU, the pact was yet to be signed.Recently, the state government had imposed fresh conditions on the CTL project proposed by JSPL. The state government has insisted on the original promoters to retain at least 51 per cent equity in the CTL project till three years of start of commercial operations.The other conditions include achieving financial closure within a year of possession of two-thirds of allotted land and furnishing status on project milestones every six months.