Banking on coal reserves, Bengal to lay red carpet for steel plants

Banking on coal reserves, Bengal to lay red carpet for steel plants
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First Published: Thu, May 31 2007. 12 15 AM IST
Updated: Thu, May 31 2007. 12 15 AM IST
West Bengal, which has had to stand in line behind the more mineral-rich states of Orissa, Jharkhand and Chattisgarh for investments in steel, is now courting a bunch of home-grown secondary steel makers to build integrated steel plants in the State.
The state, which earlier this month signed a memorandum of understanding with the country’s largest secondary steel maker, Bhushan Steel Ltd, is now all set to sign yet another similar investment proposal with the Abhijeet Group of Industries. It is also in various stages of negotiation with three other secondary steel makers, all with strong operational presence in the state.
The state kicked off the year on a high note when, in January, it signed a memorandum with JSW Ltd for a Rs35,000 crore investment in a 10 million tonnes (mt) integrated steel plant.
West Bengal, which barely has any iron ore reserves, does not have national and international steel majors flocking to it for setting up steel plants unlike its neighbours Orissa and Jharkhand.
What it does have is a loyal group of secondary steel makers enthusiastic about integrating backward, tapping on the state’s coal reserves, which are the fourth largest in India.
“We do not see iron ore linkage as an issue,” says Aditya Jajodia, chairman and managing director of Sri Ramrupai Balaji Steels Ltd, which has proposed to invest Rs16,000 crore in the western district of Purulia, to set up a 5mt integrated steel plant, a 3mt cement plant and a 1,250MW power project.
He says that his steel plant will deploy a technology that can operate with iron ore fines and is not put off by states, such as Orissa, insisting on ore being used within the state. “That rule applies only if one wants to acquire an iron ore mine, but not for open market iron ore purchases,” he points out. His company is, instead, banking on the coal mine it has applied for West Bengal.
The same line of thinking seems to be driving Bhushan Steel’s investment in the state, where it is also looking at coal reserves. “Given the quantum of fines being shipped out of the country currently, we do not see any supply crunch there,” Neeraj Singal, managing director, Bhushan Steel, said at the time of signing the memorandum with the state government on 11 May.
Shyam Sel Ltd, another secondary steel maker, is in early stages of negotiation with the West Bengal government for a 1mt integrated steel plant involving about Rs3,000 crore in investment in Burdwan district, which is already home to one of the country’s major steel plants, operated by the Steel Authority of India Ltd. An official of the company, who did not want to be identified because negotiations were at an early stage, says the advantages of West Bengal come from its port facilities, proximity to the iron ore mines and availability of coal. Officials of Adhunik Group, which is pitching for a Rs3,000 crore investment in another 2mt steel plant, refused to comment on the project at this nascent juncture.
Banking on coal, most of the new brood of steel makers are proposing to set up power projects along with steel plants. Bhushan Steel has included a 1,000MW power plant in its project proposal. Similarly, the Abhijeet Group, which is on the verge of signing a memorandum with the state government for a Rs10,800 crore investment in a 2mt integrated steel plant, will also be setting up a 1,250MW thermal power plant. The investors are also eyeing a growing market for steel within West Bengal. The coming of automotive projects, led by the Tata Motors Ltd’s project to build the country’s cheapest car (at Rs1 lakh) at Singur, is proving another impetus for these players.
“We are looking to encourage as many steel projects in the state as possible,” says Sabyasachi Sen, West Bengal’s principal secretary for commerce and industry. “We are particularly focusing on pushing for speciality steel and stainless steel that can be used by the automotive industry.”
Bhushan Steel’s project includes a plant for making cold rolled and galvanised steel with specific application in the automotive sector. Shyam Sel, which is yet to freeze on its downstream products, is eyeing the automotive sector, indicates the company’s official.
One critical factor for these projects is land. While JSW has been given 4,300 acres of land for its project at Salboni, near the industrial town of Kharagpur, land for the ensuing projects are yet to be tied up.
“We will be seeking outside professional help to independently assess the land requirement for these projects,” says Sen. Most of the proposals are for projects involving 2,500 acres each.
However, the Jai Balaji group of Jajodia is looking for 16,000 acres for its combined project for making steel, cement and power.
With most of these projects coming up in Purulia and Burdwan, where land is largely rugged and non-agricultural, the government officials do not foresee major issues in land acquisition.
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First Published: Thu, May 31 2007. 12 15 AM IST