New Delhi: In what could be the biggest ever Chinese FDI in India, Sinosteel plans to invest Rs16,000 crore to build a 5-million-tonne (mt) greenfield steel plant in Jharkhand.
“We will submit our project proposal to the Jharkhand government within 10 days and sincerely expect to sign a memorandum of understanding (MoU) by June to build a 5mt steel plant in the mineral-rich province of India at an investment of $4 billion (Rs16,000 crore),” Sinosteel India Managing Director Hongseng Wang told PTI.
Sinosteel would fund the entire $4 billion investment out of its own accruals.
He said the state-run MECON has been entrusted with carrying out the feasibility study for the plant, which is likely to be located within 40km of Ranchi and the firm is expected to submit its report soon.
The company would need around 4,000 acres of land for the plant.
Ruling out any problem on land acquisition, Wang argued that the plant would provide direct employment to 3,000 people and the villagers would definitely appreciate the value of the plant within their vicinity.
The Sinosteel chief said the proposed plant would require around 200 metric tonnes of ore annually for the plant for which talks would be held with the Jharkhand government to ensure iron ore linkage. He said his company was ready to proceed ahead even if it was not given mines and would source it from the market.
However, he reasoned that since this was a big project for Jharkhand, the state government should facilitate it.
Wang said the proposed steel plant would be built in three phases and the first phase would be of around 1.5 MT and the full capacity was likely to be commissioned within the next five to six years.
He said the company was undeterred of facing stiff competition from Korean Steel giant Posco and steel baron L N Mittal who have proposed to set up plant in Jharkhand and Orissa. Posco has pledged to invest around Rs52,000 crore to build a 12mt steel plant in Jagatsinghpur district of Orissa.
The race for Chiria mines is likely to intensify as Sinosteel too is eyeing the rich reserves from the world famous mines. Chiria has two billion tonnes of ore reserves and Mittal Steel and state-run Steel Authority of India Limited (SAIL) are vying to secure reserves for their projects in Jharkhand.
The Sinosteel India managing director denied that the second biggest Chinese steel company has made a late entry into the country’s booming steel sector. He said the market was ripe enough to absorb its products which would be mostly flat steel slabs.
Like Posco, Sinosteel was also exploring the possibility of seeking a Special Economic Zone (SEZ) status for its greenfield project to avail tax benefits, he said.
The Chinese steel giant is an equipment manufacturer and hence would not need technological tie-ups with anyone else to source the same, Wang said and pointed out that if the Jharkhand government facilitated the project then his company was ready to commence the groundwork for the 5mt plant.