Steelmakers rush to set up plants in Orissa

Orissa plans to produce 10 million tonnes of steel over the next five years, and has lined up a combined investment of Rs 12,000 crore to implement it.

The state government has already signed memorandums of understanding (MoUs) with seven companies for setting up steel projects, which are now in various stages of implementation.

In addition, the Industrial Infrastructure Advisory Committee (IIAC), headed by the state chief secretary, vetted and approved four more projects yesterday, paving the way for signing of MoUs with their promoters soon.

Maharashtra Seamless, SPS Sponge Iron, Orissa Sponge Iron and Sunflag Special Steels Ltd are promoting the four new projects approved by the IIAC. With a total investment of Rs 2,500 crore, the combined capacity of these projects is about 2 million tonnes of steel.

The projects, for which MoUs were signed earlier, involve a total investment of Rs 2,040 crore and their combined capacity is estimated at 2.15 million tonnes.

Apart from these, proposals for 13 more projects were in the pipeline, said sources. Among the promoters of these projects are Jindal Stainless Steel, Jindal Steel and Power, Bhusan Steel, Orissa Cement and National Group.

The rush of companies to set up steel plants in Orissa is being attributed to the current buoyancy in the steel market and the focus of the state government on value addition. It has stipulated that to be eligible for iron ore mine leases in Orissa, the promoters concerned should "substantially" invest in value addition within the state.

In the mid-1990s, Orissa had seen a similar flood of proposals for setting up steel plants. Except for the public sector Nilachal Steel, promoted jointly by MMTC and the Orissa government, all other projects had fizzled out.

"Then, most of the promoters were coming here to grab iron ore mines without being serious about the project," said an official in the state's industry department.

Also, some projects, like the ones proposed by Tisco, L&T or Kalinga Steel, were mega in size and required a lot of infrastructural support from the state government.

But unlike the last occasion, the size of the projects in the pipeline this time are much smaller, making it easier for the promoters to arrange finances for their implementation.

Similarly, the clause of substantial investment on value addition for allotment of iron ore mines has helped in weeding out non-serious promoters, sources said.

Infact, of the committed investment of Rs 500 crore by the promoters in different steel projects in the state in last one year, about Rs 150 to 200 crore has already been invested in plant building work, sources said, adding by December end, this year about 0.5 million tonne steel capacity will be commissioned by one or two fast moving projects.

Most of the projects are using a combination of sponge iron and mini blast furnace route to make steel and the proposed final product will range from billets to long and flat products.