The Hindu Business Line : Vizag Steel mulls setting up sponge iron plant in Jharkhand

VIZAG Steel Plant, belonging to Rashtriya Ispat Nigam Ltd (RINL), is contemplating setting up a sponge iron unit in Jharkhand in a joint venture with National Minerals Development Corporation Ltd (NMDC).

The proposed sponge iron factory will actually be a `manufacturing unit', as suggested by the Jharkhand Government to all those who had applied for iron ore mining blocks in that State.

According to Mr S.R. Kamath, Executive Director (Materials Management) of RINL, the proposed joint venture between RINL and NMDC had considered setting up either a sponge iron unit or a pellet production plant.

"We had dropped the idea of producing pellet as it is not cost effective. Ideally, we would have preferred iron ore but as the State Government wants a manufacturing unit there, we might set up a sponge iron plant," Mr Kamath said.

He was talking to reporters after attending the 44th annual general meeting of the Indian Refractory Makers Association. He said the mines in Jharkhand had already been identified and applications had been submitted.

Apart from the RINL-NMDC duo, several private companies are also in the race for the mining blocks.

Mr Kamath said, being public sector companies, their proposal was on a strong wicket. He, however, added that the committed iron ore sources are crucial for RINL before it actually starts the capacity expansion programme. From 3.5 million tonnes per annum, it is scheduled to go up to 7 million tonnes by 2007.

According to Mr Kamath, the capacity expansion programme, which will cost Rs 8,250 crore, had already received the Public Investment Bureau clearance.

Though the Union Cabinet approval is still expected for the capacity expansion, RINL has started preparing the specifications required for the formal tendering exercise.

Meanwhile, the company is yet to decide on whether it would form a joint venture with any of the overseas coal companies. Representatives of RINL have visited several countries and identified the blocks.

Mr Kamath said three companies have been shortlisted, and they are based in Canada, Columbia and Australia. The average capacity of each of these companies is 2-3-million tonnes per annum.

RINL is satisfied with the samples of these companies.

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