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Mr B. Muthuraman, Managing Director,Tata Steel (right), with Mr S. Asokan, Chief, Titanium Project, at a press conference in Chennai on Thursday.

CHENNAI, June 27

TATA Iron and Steel Co Ltd (Tata Steel) today signed an MoU with the Tamil Nadu Government to undertake a techno-economic feasibility study for a project to set up an integrated titanium dioxide plant using the mineral sands available in the State's southern districts.

The feasibility study, for which the consultants will be identified in the next three to four months, will take 18 months to be completed and will determine whether it will be viable for Tata Steel to go ahead with the project.

If the project comes through, Tata Steel will be investing close to Rs 1,800 crore in the venture, the first such foray into the South by the company, according to its Managing Director, Mr B. Muthuraman.

He told a press conference here today, after signing the MoU with the Government represented by the Industries Secretary, Mr Arun Ramanathan, in the presence of the Chief Minister, Ms Jayalalithaa, that India had the fourth largest deposits of rutile and illuminite in the beach sands in Kerala, Tamil Nadu, Andhra Pradesh and Orissa.

The project involves separating the rutile and illuminite from the beach sand, and processing and enriching them to produce titanium dioxide, which has extensive application in the pigment and paint industries.

Currently, he said, India imported about 25,000-30,000 tonnes per annum of titanium dioxide, and as the economy grew, its consumption would also go up.

The feasibility study itself would cost about Rs 15 crore, for which Tata Steel had short-listed four international consultants.

The first phase, which involved mining and beneficiation and the manufacture of synthetic rutile, would cost Rs 600-700 crore. Synthetic rutile was used in the manufacture of electrodes.

Two years after the first phase, the company would go in for the next stage, which involved the manufacture of 60,000 tonnes per annum of titanium dioxide, at a cost of Rs 1,000 crore.

The project, Mr Muthuraman said, would generate about 3,000 jobs, a majority of which would be through indirect employment.

The company had applied for prospecting and mining leases in Tirunelveli and Tuticorin districts. The lease was for 250 sq. km., of which the non-forest area was 90 sq. km., and the remaining forest area.

Mr Muthuraman said even in the land classified as forest area, there were not many trees. Tata Steel would take adequate safeguards to protect the environment. Moreover, the heavy mineral content in the beach sand was only 9-10 per cent.

He said that Tata Steel required help from the Tamil Nadu Government in acquiring land, supplying power at competitive price as the project would require about 30 MW of power in the final stage, and supply of water.

The project would require 12 million gallons a day of water and the Government would have to convey water from the Tamirabarani, about 50 km away, to the project site. "I have every confidence that this Government will do that."

To a question, Mr Muthuraman said the company was working with all the four States where mineral-rich beach sands were to be found. The best deposits were in Kerala followed by Tamil Nadu.

While discussions were on with the other State Governments, the company's proposal had moved to the MoU stage only with Tamil Nadu, he said.

"Our work with Tamil Nadu is definitely far ahead of that in the other States," he said and pointed out that in Kerala, there were issues of environment, and hence, there might be difficulties. "Given the current conditions, we definitely prefer Tamil Nadu," he said.

He said that Tata Steel had also requested the Tamil Nadu Government that it should not allow any other company to take up a similar study till its study was completed.

Asked why the delay in signing the MoU when Tata Steel had expressed its intention to get into this project as far back as September 2000, company officials said it was because of the change in Government.

Apart from ensuring import-substitution of titanium dioxide, Tata Steel also believed that titanium would be the metal of the future, once cost-effective technology became available.

Therefore, the titanium dioxide project would be a stepping-stone for the company to get into the manufacture of titanium, as and when its consumption went up and when cost-effective technology was readily available, he said.

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