SAIL plans steel mill in ore battle with Mittal

Sites being shortlisted for 10-million-tonne plant.

Steel Authority of India Ltd (SAIL), the nation’s biggest state-run producer, plans to build a 10-million-tonne steel mill in expectation of beating ArcelorMittal for the rights to control the nation’s biggest iron ore reserves.

Sites for a plant to exploit the Chiria deposit in Jharkhand state are being shortlisted, Chairman S K Roongta said in an interview at the company’s New Delhi headquarters, without specifying the cost or timeframe.

SAIL, which won back the right to half of the 2-billion-tonne deposit last month, is battling ArcelorMittal, Tata Steel and JSW Steel for control of the rest of Chiria. The deposit, with iron content of as much as 65 per cent, according to the steel ministry, was stripped from a SAIL unit in 2005 because it hadn’t developed the block.

“Anyone who wants to put up a large-sized plant is looking for a big deposit instead of fragmented ones,” said A S Firoz, an independent steel analyst and former chief economist at India’s steel ministry. “Chiria is attractive as it’s one of the few large deposits available in Jharkhand.”

SAIL shares, which have more than doubled this year, rose 1.3 per cent to Rs 165.75 at close of trade in Mumbai today.

Luxembourg-based ArcelorMittal, which plans to invest $20 billion to set up two 12-million-tonne crude steel plants in India, is vying with SAIL to win the Chiria rights for its planned Jharkhand plant, Vijay Kumar Bhatnagar, head of the Indian unit of ArcleorMittal, said on November 4.

Detailed report
The states of Jharkhand, Orissa and Chhattisgarh hold 55 per cent of India’s iron ore reserves, the main steel-making ingredient. The region has attracted investment proposals from more than 200 local and overseas steel makers, according to steel ministry data. SAIL has hired Mecon Ltd to prepare a detailed project report, Roongta said in the interview on November 4. Every 1 million tonnes of capacity may cost as much as Rs 400 crore ($85 million), he said.

India’s steel demand will probably grow by as much as 10 per cent in the year ending March 31, according to the steel ministry. SAIL, whose sales rose 30 per cent last month from a year ago because of car and construction demand, is increasing capacity at its existing plants to increase output to 23.46 million tonnes from 14 million tonnes by March 2012.