Tata Steel to start construction on Orissa steel plant by month-end

Tata Steel will finally start the construction on its much delayed Orissa steel plant by the month-end.

Tata Steel, currently the tenth-largest steel manufacturer in the world, has completed the ground levelling at the plant site and is hoping to kick off construction work of the six million tonne per annum (mtpa) plant by January end, said H M Nerurkar, managing director, Tata Steel, during the announcement of the company’s follow-on public offer.

If Tata Steel is able to start construction of the plant, it will be one of the first projects in the last few years to have successfully cleared environment and administrative issues of late associated with planned projects in Orissa.

In 2004 Tata Steel had signed a memorandum of understanding (MoU) with the Orissa government to set up a six mtpa integrated steel plant at Kalinganagar.

However, due to land acquisition issues and non-allocation of iron ore and coking coal mines for it, the project did not take off and the MoU expired in 2009.

While the company has written to the state for the extension of the MoU, it has also been repeatedly requesting for allocation of mines.

“We are confident that state government will allocate us mines for the project,” said Nerurkar.

Sandip Biswas, group head - corporate finance, told DNA  that as per the company’s policy, it will look at 100% captive availability of iron ore and 50% security as far as coking coal is concerned.

“Till the time we are not allocated the mines, we will use our own resources for producing steel from the Orissa plant,” said Biswas.
Nerurkar said Tata Steel will develop the project in two phases of 3 mtpa each with the first phase likely to be operational in 36 to 40 months from the start of construction.

“The first phase will cost close to Rs16,000 crore out of the total project cost of Rs23,000 crore. Ground levelling is over and by the end of this month we will start the foundation work for the coke oven and sinter plant,” he said.

He said the company has up to two-thirds of land under possession, which is sufficient to complete the first phase.
Biswas said though the funds for the project have not yet been tied up, it will be done within six months of starting the construction.
“Therefore, if we start construction by January end, the financial closure will be completed by July,” he said.