Tata Steel plans to add 6 mt in capacity through brownfield expansion

Tata Steel is mulling to set up a 5 million tonne module in the second phase at Kalinganagar Plant

Tata Steel plans to add 6 million tonne steel output to its existing 13 mt capacity across two facilities at Jamshedpur and Kalinganagar through brownfield expansion over the next few years.

Of the proposed expansion, 1 mt would be added to the 10 mt steel mill at Jamshedpur, and the capacity of the newly commissioned Kalinganagar steel project would be ramped up by 5 mt.

“It is always better to go for brownfield expansion to add capacities instead of putting up a greenfield project. We do not have any plans to go for a greenfield project at any site in the country at present,” said Managing Director TV Narendran.

The company faced many hassles in putting up a greenfield project at Kalinganagar, which took more than a decade to become operational after signing of an MoU due to protracted agitation by locals over land acquisition and other bottlenecks.

Tata Steel has received environment clearance for the expansion at Jamshedpur.

Similarly, it is planning to set up a 5 mt module in the second phase at Kalinganagar, which is up by 2 mt  from the 3 mt initially planned for phase-II at this site. Overall steelmaking capacity at Kalinganagar will go up to 8 million tonne.

However, Narendran declined to comment on the exact time frame and cost of the expansion at both the sites.

Though the company had commissioned the first phase of the Kalinganagar project, comprising 3 mt steel capacity and cost of Rs 25,000 crore in November last year, it had only started commercial production from the plant in May this year.

“Now, our focus is to achieve full capacity of phase-I at Kalinganagar plant, which is running at 60 to 70 per cent of the rated capacity. This month we would be making 1.6 lakh to 1.7 lakh tonne of steel at Kalinganagar which would go up to 2.5 lakh tonne per month by March, 2017. Overall we will be producing 1.5 mt steel from this plant in this financial year...We hope to produce at full capacity all through the next year,” Narendran said.

After that the company plans to go to the board with the proposal for phase-II, he said.

But, before the start of work on phase-II, the company has to get hold of the required land for the expansion. Out of 3475 acres allotted to Tata Steel at Kalinganagar, the company is currently in possession of 2,100 acres with the balance land still being occupied by the agitators protesting the project since 2004.

Admitting that the company is yet to get possession of the entire patch of land required for phase-II, Narendran said, “We hope it will be sorted out in next two months”.

Narendran was optimistic about pick up in steel demand in the country. “The worst is behind us. The steel demand is growing at 5 to 6 per cent annually which can accommodate 4 to 6 mt additional output”, he said.

“A good monsoon this year is expected to boost demand in the rural areas. This is already reflected in higher sales of tractors and two wheelers. Higher sales were also reported in commercial vehicles in Q1 though it slipped slightly in Q2. Besides, the government’s emphasis on building rail and power transmission network will lift up steel demand. Overall second half of the fiscal will be better than the first half in terms of steel consumption”, he added.