The country's biggest iron ore miner NMDC today inked a pact with Russia's Severstal to set up a five-million tonne steel plant in Karnataka.
The joint venture company proposes to have its captive coking coal mining subsidiary in Russia and iron-ore mining subsidiary in India, which will ensure long-term supply of the critical steel making raw material to the proposed plant.
"The plant will have an initial capacity of 2 million tonnes per annum (MTPA), which is expandable to 5 MTPA," NMDC Chairman Rana Som said at an Memorandum of Understanding signing ceremony here.
Both NMDC and Severstal will have a 50 per cent shareholding each in the joint venture and will appoint the senior management team.
"The signing of this MoU is an important strategic development for us as it will establish the steel plant in one of the most attractive growth markets in the world with India poised for 9 per cent growth," Severstal CEO Alexey Mordafhov said.
When asked about the investment in the plant, Som said that exact investment requirement will be assessed in a months time.
"Karnataka government has already alloted 2,500 acres of land to NMDC for the project," Som added.
He said that coking coal will be imported from Severstal for the JV.
Steel Secretary PK Misra said that this is the first joint venture in steel making between Russia and India.
Severstal will share its latest steel-making technology with NMDC for the venture, which will produce auto grade and electrical steel to meet its rising demand in the country, Som said.
The Russian firm is said to be among the top global steel ventures possessing expertise in producing specialised steel.
Severstal seeks to expand to India and South-East Asian economies to tap the growing markets.
The Karnataka plant will be NMDC's second in India as it has already started work on its 3 MTPA project in Chhattisgarh entailing an investment of about Rs 15,000 crore.
At present the Navratna firm produces about 30 MTPA of iron ore from 3 fully mechanised mines in Chhattisgarh and Karnataka.
The Karnataka steel project assumes significance in the wake of rising demand for steel amidst foreign investments worth thousands of crores of rupees pending in the steel sector due to land acquisition and other problems.
