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Southern Ispat to set up 1.2 mt pelletisation with Rs 300-cr capex

The plant is set to come on stream by April 2014

Dilip Kumar Jha Mumbai
Last Updated : Feb 22 2013 | 6:30 PM IST
Steel producer Southern Ispat & Energy Ltd. (SIEL) is planning to enter into backward integration by setting up a pelletisation plant with 1.2 million tonnes capacity in Chattarpur, Madhya Pradesh. 
 
With an estimated investment of Rs 300 crore, the plant is set to come on stream by April 2014.
 
Non-availability of high grade iron ore due to restrictions levied by the Supreme Court for mining with a complete ban followed by a partial roll back in Karnataka, steel mills have been facing huge supply shortage of the raw material. 

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A number of companies are also entering into pelletisation to convert low grade iron ore into high grade ore for use in stele furnace.
 
“SIEL will invest Rs 150 crore in the first phase. The remaining investment would be done in the second phase. The company has already acquired 100 acres of land in Chattarpur (MP) and expected to start its beneficiation and pelletization process by April 2014,” said a senior company official.
 
As a part of backward integration, SIEL entered into mining activity in Buxwaha Iron Ore mine spread over 150 hectares in Chattarpur over a decade ago. The mines have a substantial resource base of superior quality iron ore with high Fe (iron) content and bulk density.
 
SIEL Mining will hold a leading position in the Indian mining industry for its superior mining techniques, equipment, and scale and flexibility of operations and systems. The potential of proven deposit, as well as the quality and quantity of reserves, are good enough to sustain mining operations for the next 20 years at the current operating capacity. 
 
Agglomeration of beneficiated and ground iron ore into spherical shaped green balls and subsequent heat hardening them is termed as Pelletizing. 
 
SIEL reported a marginal increase in its consolidated net profit at Rs 13.59 crore for the quarter ended December 31, 2012 compared to Rs 13.36 crore in the corresponding period last year. The company’s net sales jumped 8.50% to Rs 259.13 crore for the third quarter of current fiscal as against Rs 238.82 crore in the same period last year.
 
This proposed investment will enable SIEL to securing its raw material requirements and will cater the iron ore demands of its existing as well as it proposed steel plants. 
 
Moreover, with soaring international steel market potential, this value addition will lead to capitalize their mining resources and will lead an incremental increase to topline by Rs 250 crore and maximize profits by Rs 50 crore thus enhance value creation of the company, he added.
The company currently produces billets for longs and flats steel producers.
 

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First Published: Feb 22 2013 | 6:28 PM IST

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