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SAIL will soon ink an equal joint venture pact with sister firm, KIOCL to set up a three lakh tonne a year coke oven plant and a 25 MW power plant at an estimated investment of Rs 500 crore, a source said.
The coke oven plant, which converts coking coal into coke for use in the steel mills, would be set up at Mangalore in Karnataka for which ground work is likely to start in the current quarter itself.
"The joint venture agreement will be signed within the current month and work on the Rs 500 crore project, including the investment in the power plant for captive use, will start within the next two months," the source said.
The project, based on imported coking coal, will go on stream in about one and a half years to two years from now. State-run miner KIOCL, which was formerly known as Kudremukh Iron Ore Company Ltd, is spearheading the venture. All the necessary environmental clearances are in place, he added.
The source said the proposed investment in the venture would be funded in 2:1 debt-equity ratio and both SAIL and KIOCL will have the off-take right in equal proportion.
SAIL would use its share for captive purposes. KIOCL has plans to sell the finished product in the open market.
Among the three alloy steel plants that SAIL has now, one is located at Bhadravati in Karnataka and the other two are at Durgapur in West Bengal and Salem in Tamil Nadu.
SAIL will probably use the coke from the proposed plant to feed its Bhadravati facility, known as Visvesvaraya Iron and Steel Plant (VISP). It supplies alloy and special steels to strategic sectors like defence, railways and automobile.
Since coking coal cannot be directly used in blast furnaces, these are converted into coke for making steel.
