New Delhi: Steel Authority of India Ltd, the country’s largest steel producer, plans to spend Rs2,500 crore to set up a 1.5 million tonnes pelletization plant in Chhattisgarh and develop a section of the Rowghat mines.
The board of directors has approved a plan to build the plant and develop the mines, which will feed the company’s Bhillai Steel Plant, a manufacturer of rails and heavy steel plates. The plant has been under pressure to secure iron ore after supplies hit low levels.
Located 40 km off Chhattisgarh’s capital of Raigarh, the Bhillai plant plans to take its total capacity to 10 million tonnes by 2020 from 3.5 million tonnes, and will enter into the niche segment of heavy-beam construction by setting up a 1.2 million plant for construction and bridges.
The company must secure forest clearance for the mines, which means the land’s use can be converted, according to a state mining official who requested anonymity. The company, among several other claimants, had applied for a lease to the mines in the 1980s. The state cancelled the lease and issued a fresh lease this year to Sail, which has a reserve of 500 million tonnes.
The company plans to produce 14 million tonnes of iron ore a year, according to a Sail executive who did not want to be named. The board has given directions to hire consultants for the project.
Fines, the dusty crumbs extracted from iron ore that can be made into pellets, were once an unwanted industrial waste, but a few companies such as Essar Steel Ltd, JSW Steel Ltd and Ispat Industries Ltd have opted to make steel by using pellets rather than the popular sinter technology used by a majority of companies that use blast furnaces.
JSW Steel was the first to foray into pellets by setting up a five million tonnes plant in Karnataka’s Bellary region more than six years ago. Last year, Ispat announced a pellet project in Visakhapatnam. Now, Jindal Steel & Power Ltd plans a 4.5 million tonnes pellets plant in Orissa. “It will be mainly for our captive use and feed our plant in Raigarh,” said Sushil Kumar Maroo, Jindal’s director of finance.
Pellets primarily strengthen the iron content in ore by ridding impurities like mud and silica and then converting into marble-sized lumps though a process called agglomeration.
The country’s largest pellet plant is also the most ambitious. Essar Steel has set up a 8 million tonnes plant in Visakhapatnam. It transports an iron slurry through a 267km underground pipeline from Kirandul in Chhattisgarh to its plant in Visakhapatnam to make pellets, and then dispatches it to Hazira, Gujarat by sea to make hot rolled coils.
The plant opened a year ago. The average international price of pellets is $130 per tonne, lower than ore lumps at $85 per tonne and fines at $60 a tonne. Independent analyst Ahmad Shah Firoz said it makes business sense for companies to get into pellets for captive use. “During cyclical downturn of prices of iron ore, pellets come under greater pressure,” he said.