Tata, NMDC set to build steel plants

Tata Steel and NMDC, the country’s largest private sector steelmaker and largest iron-ore miner, respectively, will team up to develop the latter’s two steel projects in Karnataka and Chhattisgarh.

The companies had signed a memorandum of association on January 22 for a possible strategic alliance.

But now sources told DNA Money that they have started initial talks
on the nitty gritties of projects. The companies have formed a joint steering committee for developing the plants.

Rana Som, chairman cum managing director, NMDC, said the public sector miner is assessing opportunities. “No, nothing has been decided as yet. We have formed a committee and I can’t say anything until the process is complete,” he told DNA.

Som, however, confirmed that the Tata’s could be the partner for the proposed plant at Bellary in Karnataka. “The fate of the Bellary steel plant depends on when the iron ore mines are given to us by the government. Till then the project is in limbo. Once we are given linkages, we will look for a partner, and Tata Steel definitely will be given a priority and it would make for a very stable partner.”

An e-mail sent to Tata Steel on April 7 remained unanswered, but sources close to the talks confirmed that building the steel plants with NMDC is high on the agenda.

“Yes, talks are on and Tata Steel is keen to join NMDC in building its 3 million tonne steel plant in Jagdalpur, Chhattisgarh,” a Tata Steel official said.

A tie-up will be useful for both companies. Tata Steel is looking to enhance its iron-ore resources and wants to develop technology for using lower grades of iron ore.

NMDC, on the other hand, is looking beyond its iron-ore business and wants to establish its presence in steel-making.
After the January deal, Tata Steel had said in a statement, “Both NMDC and Tata Steel have agreed to co-operate to explore possibilities of entering into joint ventures for the purpose of acquisition, exploration and development of mines, extraction and processing of minerals, setting up integrated steel plants and any other business which is of mutual interest to both organisations.”

It added that it’s a wonderful opportunity for both companies to work together, given that the steel policy talks of doubling capacity over the next decade. “Tata Steel and NMDC plan to jointly address mining and steel-making opportunities,” the statement said.
NMDC is looking to set up a 3 million tonne steel plant in Jagdalpur district of Chhattisgarh at an estimated cost of Rs 16,781 crore.

The company has obtained the environmental clearance for the project and land acquisition is underway.

Out of the 1775 acres required, NMDC has acquired around 1000 acres of land and hopes to complete the project in four years time from the day of beginning the construction.

In Karnataka, the state government has offered 2500 acres of land in the Bellary/Hospet area to NMDC. The iron ore miner will be building the first phase of a 2 million tonne plant at a cost of Rs 10,000 crore.

However, iron ore mine linkages are not offered as yet and NMDC is not ready to begin construction till the mines are allocated.