The coal ministry has decided to act on the recommendation of IMG and has deallocated the Gouringdih coal block in West Bengal that was allotted to JSW Steel and Eastern Minerals and Trading Agency (EMTA). This has cast shadows on the 10 million tonne steel plant JSW Steel is building in Salboni district of the state.
A senior official of JSW Steel said the plant construction is unlikely to begin if the raw material is unavailable. The plant construction was supposed to start from October 2012.
“It is premature to comment on an outcome based on media reports when no communication is received by the company from relevant authorities,” JSW spokesperson said.
Iron ore and coking coal are essential raw materials for steelmaking. Coal is used to fire the power plants which is needed to make steel. JSW Steel has plans to set up a 10 million tonne steel plant in Salboni, West Bengal but the first phase of the plant was only a 3 million tonne steelmaking facility and a 300 MW power plant.
Now, with the coal block taken back, the power plant will be left with no coal which means that the entire project cost and feasibility will have to be reworked, the official said.
The company had applied for iron ore mines as well but haven’t got any. It was looking at sourcing iron ore from local mines from neighbouring states. JSW Steel imports its entire need of coking coal.
The company signed a memorandum of understanding (MoU) with the West Bengal government and was about the begin the construction of the first phase of the plant. In the first phase the company had planned to set up a 3 million tonne blast furnace to make steel and a 300 MW power plant. This power plant was supposed to get its coal feed from the Gouringdih coal block.
This is the third time the progress on JSW Steel’s Bengal plant will see stoppage. First the company did not begin construction as the global economy slumped and the coal block allocation took time.
Then its land acquisition came under the scanner of the state government and just recently, Mamata Banerjee led West Bengal government cleared the land acquisition and the paperwork related to the entire 4334 acres for the steel plant was completed.
The company needs Rs 15000 crore to build the first phase and is looking to raise Rs 10,000 crore from export credit agencies.