"We are going to scale up sponge iron capacity to 0.5 million tonne per annum (mtpa) from 0.1 mtpa. The capacity of captive power plant (CPP) at the plant site will also go up from 8 Mw to 80 Mw. The capacity expansion plan will be fully implemented in 3-4 years," Amit Gupta, executive director, Narbheram Power & Steel Ltd told Business Standard.
Besides sponge iron, Narbheram is also producing billets (an intermediate steel product) with an installed capacity of 0.004 mtpa.
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"We are supplying billets mostly to end use consumers in north & south India," said Gupta.
Narbheram Power & Steel Ltd (NPSL) had signed an MoU (memorandum of understanding) with the Odisha government in October 2003 for establishment of a 0.80 mtpa capacity steel plant at Gundichapada near Dhenkanal at a cost of Rs 824 crore.
Government records show NPSL has already invested Rs 152.41 crore on its Odisha project. The company's MoU which was valid till September 2011 has been recommended for further extension by Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol).
The company has been allotted the Radhikapur east coal block jointly with Tata Sponge Iron Ltd and SPS Sponge Iron Ltd, located 60 km from NSPL's sponge iron making facility.
The coal block is yet to begin production and NSPL has secured coal linkage from Mahanadi Coalfields Ltd (MCL). But the company is mostly relying on imported coal due to high ash content of locally available coal.
Talking on the challenges faced by the DRI (direct reduced iron) industry in Odisha, Gupta said, "The major challenge is not the scarcity of iron ore but to make it available for sponge iron manufacturers at competitive rates. In Odisha, the steep logistics cost for iron ore is a dampener for the end users. The other challenge for the industry is to prune energy consumption which has a significant share in cost of production."