Vedanta to rope in 'strong' partner for making steel: Agarwal

Mining major Vedanta Resources today said it will partner a "strong" steel company as and when it decides to foray into the manufacturing of this commodity.

"As of now, there are no plans for the steel plant. We are iron ore player. We don't have expertise in steel making. We are manufacturer of pig iron though. But in future if we go into steel making, we  will go with a strong partner," Vedanta Group Chairman Anil Agarwal told PTI.

Sesa Goa, iron ore subsidiary of the group, manufactures pig iron at its facility in Goa. The company had said it had applied for land in Jharkhand for the steel plant.

The group was also looking at Karnataka, Orissa as other possible locations for its diversified steel making business.

"In Orissa, Sesa Goa had last month written to the state government to transfer an MoU signed with Vedanta's flagship firm Sterlite Industries to it. As per the MoU, Vedanta had to set up a five million tonnes steel plant," a person in the know of the development said.

Sesa Goa, the country's third-largest iron ore exporter, is expanding its annual production capacity of pig iron to 6.25 lakh tonnes from the present 2.50 lakh tonnes. Iron ore is a vital steelmaking input. Sesa Goa has also planned to double its iron ore production capacity to 50 million tonnes by 2012.

Foreign and domestic steelmakers are looking at securing the key raw material in making steel to expand their India operations.

With the delays in regulatory processes involved for allocation of captive iron ore mines, companies are looking at forging alliances with mining companies to run steel plants. JSW Steel is in pact with a local Karnataka miner to run its steel business, since it has still not been allocated captive iron ore blocks.

Foreign companies like Posco are finding it tough to set up their independent plants in the country and are in the process of setting up such unit in joint venture with state- owned SAIL. Similarly, ArcelorMittal has partnered domestic steel firm Uttam Galva to mark its first operational presence in India.

Recently, JFE Steel of Japan agreed to purchase nearly 15 per cent stake in domestic steelmaker JSW Steel, thereby taking its first step to tap in growing steel demand in India. Vedanta's proposal for a joint venture in steel making could attract more global steel makers to India.