 "SAIL to invest Rs 1.5 lkh-cr to up capacity to 50 mt by 2025")
"SAIL has formulated its vision document. We intend to ramp up our capacity to 50 mtpa by 2025. Our present hot metal capacity is 14 mtpa. This will go up to 24 mtpa with the completion of ongoing expansion and modernisation works (by next year)," SAIL Chairman C S Verma said here today.
"Parallely, we are taking many other modernisation and expansion programmes which will take our capacity to 50 mtpa. This requires capital outlay of approximately Rs 1.5 lakh crore," Verma added.
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A Board-level committee has been looking at the proposal and the investments, which would be almost evenly funded through internal generation and debt.
"As on today, our networth is Rs 41,000 crore and going by a conservative debt-equity ratio, our borrowing power is Rs 82,000 crore. Today our borrowing is Rs 21,000 crore and most of the expenditure on the ongoing expansions is over. So, we will be generating more networth," Verma said.
SAIL has the sufficient land to carry out the next phase of expansions. All other necessary infrastructure is also in place, he said.
The proposed capacity expansion to 50 mtpa is in line with the Prime Minister Manmohan Singh's vision of enhancing India's steel-making capacity to 300 mtpa by 2025, from 85 mtpa at present.
Asked whether the country would be able to achieve the ambitious 300 mtpa target in less than 12 years from now, Verma said: "If China can add its capacity to 800 mtpa, from 190 mtpa in 10 years, why can't India?"
Verma had earlier said that most of SAIL expansion would be carried out through brownfield projects in existing five steel mills, barring one proposed at Sindri, where the plan is to set up a 5.6 mtpa greenfield steel plant.
"We will start work on increasing capacity to 50 mtpa as soon as the current phase of expansions is over next year," he had said.
The potential of steel demand in the country is huge as per capita consumption, at 57 kg, lags far behind the world average of 214.7 kg and China's average of 459.8 kg.
SAIL never had any major problem with iron ore, a key raw material for iron, almost 1.6 tonne of which is required for producing a tonne of steel. This is set to ease further with the company having been granted lease of 871- hectare magnetite mine at Bhilwara in Rajasthan a week back.
Verma said the mine, with an investment of Rs 700-800 crore, would be operational in 3-4 years with an annual production capacity of 5 mtpa. Besides, a pellet plant with 2 mtpa capacity would also be set up.
"The government is the in the process of issuing the letter of intent (LoI). We are in the process of preparing the detailed project report for the mine," he said.
On coking coal, a crucial raw material for which SAIL has to mostly depend on imports, Verma said the company was on the look out for mines through International Coal Ventures (ICVL) in the US and Australia, not individually.
"These are the two main markets. We are carrying out due diligence in four companies in these two countries. We are looking to acquire stake in coking coal mines in these two countries," Verma said, without specifying how close was the company from clinching the maiden deal.
Since its inception in 2009, a consortium of state-run firms, ICVL is yet to acquire any mine abroad, even though it has set a target of owning 500 million tonnes of coal reserves by 2019-2020.
The initial members of the ICVL were SAIL, NTPC, CIL, RINL, NMDC. But, NTPC decided to opt out of the consortium as it was seeking thermal coal blocks, while other members were keen on coking coal.
Banking on a huge buoyancy in demand following monsoon, Verma said India's steel consumption is set to grow by 6-7 per cent in the current fiscal.