Nfcl To Cart Spanish Steel Mill To Mangalore

Nagarjuna Fertilisers and Chemicals (NFCL) has finalised a deal with the Spanish government holding company, CSI, for purchase and relocation of the latter's two-million tonne per annum steel mill at Mangalore.

According to NFCL director (finance), P K Madhav, the dismantling of the plant, now located in the Basque region of Spain, will commence within six months. The dismantling process will take a year by which time the civil work and foundation at Mangalore will be ready.

Madhav said that in view of the European quota restrictions, CSI, the umbrella company managing several steel mills within Spain has decided to replace the conventional steel mill with a smaller electric arc furnace.

 

He said the proposed blast furnace steel plant was a working mill with the products being supplied to major automobile manufacturers and the white goods industry in Europe. The mill has been technically evaluated and it was a " straight transaction with a government company."

Most of the new steel projects were going in for second hand mills as the capital cost of a new plant was prohibitive. NFCL would save around Rs 1,000 crore by opting for a second hand working mill.

By opting for the second hand mill, apart from the capital cost, NFCL will save considerably on engineering, freight and commissioning time. The Mangalore steel plant will be operational within three years.

Of the 1,400 acres required for the steel plant, 700 acres has been acquired, Madhav said. "We hope to take possession in a matter of a few days", he added.

Madhav explained the financial arrangements for the Rs 5,250-crore project were being tied up.

The debt equity ratio of the project will be 2:1 with 50 per cent of the debt being foreign and the balance domestic.

The bulk of the foreign debt will be through export credit while banks and financial institutions will be tapped for the domestic debt.

He said the foreign source for tapping the credit has not yet been finalised.

This would depend on which country supplies the major equipment.

The equity will be around Rs 1,500 crore of which one-third will come from internal accruals of the Nagarjuna group while the balance will be raised from foreign and domestic sources.