Will ramp up Hazira output to 10 MT by Mar 2012: Essar Steel

Ruias-led Essar Steel today said output from its steel plant here will be progressively increased to 10 million tonnes by March, 2012, following the completion of ongoing expansion projects worth Rs 21,700 crore.

In addition, the design capacity of Essar's pellet-making plant in Orissa is being simultaneously increased to ensure adequate supply of input material for the Hazira steel unit, Essar Steel CEO Malay Mukherjee told reporters here.

"By the end of this year, our production capacity here (Hazira) would be around 5.1-5.2 MTPA (million tonnes per annum). For the next 12 months, our concentration is on (expansion projects at) Hazira and Orissa only and they are in their last leg," Mukherjee said.

Essar has so far spent around Rs 15,700 crore out of its cumulative investment commitment of Rs 21,700 crore on the Hazira expansion projects, he said, adding that the remaining Rs 6,000 crore will be utilised by the project completion deadline at the end of the next fiscal.

Out of this Rs 6,000 crore, about Rs 3,500 crore will be used to complete the ongoing expansion projects at the Hazira integrated steel plant, while the remaining amount will go toward augmenting pellet-manufacturing capacity at the Paradip plant to 12 million tonnes per annum (MTPA).

He said the company recently commissioned a 1.73-MTPA blast furnace, as well as the first 2.5-MTPA phase of its 5- MTPA steel melt shop in Hazira.

The company plans to focus more on making specialised steel products used by the automobile manufacturing industry, as the expansion projects at Hazira will enable it to do so, he said.

"Today it's about 20,000-25,000 tonnes of steel (for the auto sector). We plan to have a 50 per cent market share in this segment in the near future," he said, while pointing out that the number of vehicles in the country is expected to increase significantly in the near-term.

Mukherjee indicated that Essar's Paradip project was not plagued by the land acquisition problems that have stalled Korean steel major Posco's Rs 52,000 crore project in Orissa, with 75-80 per cent of the land requirement already tied up and the remaining likely to be acquired soon.

Talking about the outlook for the domestic market, he said, "It looks good, the real peak demand is expected to go up by April next year."

Asked about his views on a proposal in the new Mining Bill for mandatory 26 per cent profit-sharing by miners with project-affected people, Mukherjee said, "It is good on intention, but tough to implement."

At present, Essar enjoys an 18 per share of the regular steel market in the country.