Ispat signs agreement with Shell-LNG

Ispat Industries has tied up with Shell LNG to secure additional requirement of gas for ramping up its sponge iron production capacity.

LNG from Shell's Gujarat terminal would be transported by GAIL India to meet Ispat's requirement, market sources said.

The move, poised to have a positive impact on the company's bottom-line, is expected to save about Rs 200-250 crore a year with higher captive sponge iron production through increased availability of gas from Shell.

With LNG flowing in to Ispat steel complex in next two-three months time Ispat's captive sponge iron production is expected to increase by about 45% to 1.6 million tonnes per annum (mtpa).

This would replace buying of high priced scrap and sponge iron from the market to feed Ispat steel making process.

Shell's LNG would be transported through the Dahej-Uran gas pipeline now inplace. The last mile pipeline connectivity between GAIL's Uran installation and Ispat Dolvi steel complex of about 45 km is now under advanced stage of completion.

Ispat currently manufactures about 1.1 to 1.2 mtpa of sponge iron in its Dolvi plant.

Though the installed sponge iron capacity of the plant is about 1.6 mtpa, it produces only 1.1 to 1.2 mtpa using natural gas from ONGC transported by GAIL India.

To meet its metallic requirement, it buys scraps and sponge iron from the market which is currently trading at Rs 17,000 per tonne.