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After Mittal, now Jindal Steel eyes Jharkhand

The Economic Times:  June 24, 2005

Jamshedpur/Kolkata: It’s now or never for steel industry leaders as they strive to get a toehold in resource-rich Jharkhand. Close on the heels of Mittal Steel deciding to set up a 10-m tonne unit in the state, the OP Jindal group has now submitted a proposal to set up an integrated steel plant also.

Jindal Steel and Power (JSPL), an OP Jindal group company, is planning to set up a 2 m tonne (MT) integrated steel plant in the first phase. Another 3 MT is proposed to be added in the next. The Rs 2,500-crore JSPL is controlled by Naveen Jindal, the youngest son of late OP Jindal.

However, the state government has asked JSPL to either commission the steel plant initially with 3 MT, followed by 2 MT in the subsequent phase, or as a 5 MT plant all at once.

The Jharkhand government too seems eager to strike it hot. AK Sathpathy, state industry secretary told ET that the government wants major investments to flow into the state. “We want major investments in the first phase and we have asked JSPL to set up a plant with a higher capacity in the initial stage itself.”

When contacted JSPL sources confirmed the proposed plans in Jharkhand, but refrained from making any comment, saying they were not in a position to share any further details. JSPL vice-chairman Naveen Jindal could not be contacted as he was abroad.

Mr Sathpathy said JSPL plans to invest to the tune of Rs 10,500 crore for the proposed steel plant. The company intends to invest Rs 4,500 crore in the first phase and an additional Rs 6,000 crore finally. The company has almost finalised the purchase of about 3,000 acres of land in Kandra for setting up the proposed plant.

Moreover, JSPL will also set up a 250 MW captive power plant.

The techno-feasibility report of JSPL investment in Jharkhand is being prepared by leading engineering consultants Mecon. A memorandum of understanding will be signed between the Jharkhand government and JSPL, once the techno-feasibility report is ready.

JSPL is one of the largest coal-based sponge iron manufacturers with a 6.5 lakh tonne capacity, slated to go up to 1.3 MT this year. Its steel making capacity, now at 0.4 MT, is also likely to be raised to 1.65 million tonne by 2006. It has plans to set up a 1 MT plate mill along with a rebar, TMT and wire rod mill of 0.7 MT by 2007.

“As the only other manufacturer of rails of 120 metres in length, JSPL is in a position to compete with SAIL’s Bhilai steel plant in highly specialised category of long rails,” sources said.

As a strategy, the Jindal group is eyeing greenfield units particularly in those states which have abundant reserves of iron ore and coal. JSPL too has interests in coal mining near Raigarh. Last week yet another group company, Jindal Stainless Steel, managed by Ratan Jindal signed a MoU with the Orissa government for a 1.6 million tonne stainless steel plant and a 500 MW power plant for an investment of over Rs 6,600 crore.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.