Jindal Steel and Power (JSPL) plans to set up a one million tonne sponge iron plant in Orissa. "We plan to put up this project as we have iron ore mines in the state," JSPL executive vice-chairman and managing director Naveen Jindal said. The project is expected to cost the company Rs 1,300 crore.
As per the plans on the drawing board, the plant will be put up adjacent to the iron ore mines owned by JSPL. "We are looking at a coal gassification project where we will transport gassified coal through pipelines to the sponge iron plant," Jindal said.
This will help the O P Jindal group company produce HBI, a superior variety of sponge iron. "HBI is safer and can, therefore, also be exported," he added. Once the plans are firmed up, JSPL will apply for taking coal mines on lease.
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Jindal also disclosed that the financial closure of the first module of the 1,100 mw power project allotted to the group company Jindal Power in Chhatisgarh is likely to happen in one year. "Once the financial closure is achieved, we can begin work at the project by September 2002," he said. The project is being put up in two phases of 550 mw each.
The first phase is expected to cost Rs 2,000 crore. "We will be able to keep costs low," Jindal said adding, "The construction cost will work out to Rs 4 crore per mw which is better than others."
JSPL had recently put up a 55 mw power plant at Raigarh at a cost of Rs 220 crore. It is setting up another 55 mw capacity at the same site at a cost of Rs 190 crore.
As per Jindal, the new 550 mw plant will be financed through an equity contribution of Rs 700 crore, while the rest will be debt. "Other group companies will also have to contribute to the equity, though the bulk of the contribution will come from JSPL," Jindal said. As per projections made by Jindal, JSPL is expected to report a profit in excess of Rs 365 crore for 2003-04 and Rs 700 crore in 2004-05. "These profits will be used to fund the power project," he added.
JSPL reported a profit after tax of Rs 101 crore on a turnover of Rs 577 crore for 2000-01. Apart from sponge iron and power, the company produces value-added products such as alloy steel rounds and HT grade slabs. It is putting up a rolling mill with a capacity of 750,000 tonne to make rails, beams and structurals at a cost of Rs 400 crore. The mill is expected to be operational by June next year.