Financial Daily from THE HINDU group of publications
Thursday, Sep 25, 2003
RCF may scrap fertiliser project in Rajasthan
Mumbai , Sept 24
RASHTRIYA Chemicals and Fertilizers Ltd (RCF) has said it may have to scrap its proposed Rs 450-crore di-ammonium phosphate (DAP) project in Rajasthan because of delays by Hindustan Zinc Ltd (HZL) on committing raw material supplies to the plant.
According to senior RCF officials, the project has been in a limbo since Sterlite acquired Government's 26 per cent stake in Hindustan Zinc Ltd last year.
The 3-lakh tonne project was planned as a joint venture with equity participation by RCF (50 per cent), HZL (25 per cent) and Rajasthan State Mines and Minerals Ltd (RSMM) (25 per cent).
While RCF was to set up the plant and ensure ammonia supplies, RSMM and HZL were to supply rock phosphate and sulphuric acid.
The sulphuric acid was residue from HZL's planned green field smelter in Kapasan. The company dropped the idea of setting up a green field project after Sterlite assumed control and decided to go in for a brown field expansion at Chanderiya, instead.
Following this, HZL also backed out of picking up an equity stake in the proposed DAP project and instead offered to supply raw material.
According to RCF, the company has been delaying even the raw material supply contract.
"The project has been in the planning stages for the last 3-4 years. The market survey conducted last year suggests that we can sell the entire DAP in Rajasthan itself, where demand for the fertiliser is high. But until HZL commits to a 15 to 20-year raw material supply contract, there is no point in going ahead with the unit," Mr S. Balan, Chairman and Managing Director, RCF Ltd, told Business Line.
"We have been waiting for a concrete response from HZL for more than six months. If we do not hear from them, RCF and RSMM will have to scrap the project," Mr Balan said.
When contacted, the HZL spokesperson said, "HZL is still interested in the long term supply agreement for supply of sulphuric acid to this joint venture but we are not interested in taking the equity stake since we would like to stay closer to our core areas of mining and smelting."
He said the company had offered "preferential terms" for supply of sulphuric acid. RCF denied the claim.
"We have not heard of any preferential terms or any terms of supply from HZL," Mr Balan said. RCF's proposed DAP unit will supply northern markets of Punjab, Haryana and Rajasthan. While most DAP producers have been closing shop because of high ammonia prices, RCF claims it will face no such problems as it produces ammonia.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2003, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line