Sterlite group revives Orissa steel project

The Sterlite group is gearing up to revive its steel project in Orissa in partnership with a foreign company. The project, which was to be undertaken by Sterlite Iron and Steel Co, would now be under a joint venture company.

Anil Agarwal, chairman, Vedanta Resources (holding company for the Sterlite group) said discussions were on with potential partners and the deal would be finalised this year.

Agarwal said the company had not pursued the project, but would now take it up. The investment in the steel project would be above Rs 15,000 crore lined up for India over the next few years.

The initiative will mark the entry of a third foreign steelmaker in Orissa and in the country. The plant size is expected to be 6million tonne.

According to the MoU, signed the Orissa government on October 15, 2004, the first phase of the 3.4 million tonne plant would cost Rs 9,782 crore and for the second phase, with a capacity of 1.7 million tonne, the figure is pegged at Rs 2,720 crore.

The location for the steel plant is likely to be Palasponga in Keonjhar as per the MoU. Agarwal said Sterlite would bring its mining expertise to the joint venture, while the partner would focus on steelmaking. Sterlite has expressed interest in acquiring 51 per cent of Mitsui's stake in Sesa Goa, which is on the block.

Sesa Goa happens to be India's largest private sector iron ore exporter.Agarwal did not comment on the investment required for the buyout. He, however, said, "We haven't done the valuation yet."

The move makes sense for Sterlite since Sesa Goa has mining operations in Goa, Karnataka and Orissa. Sterlite's core assets are in aluminium, copper, zinc and lead.

The group also has substantial copper assets in Zambia and two copper mines in Australia.