Odisha on radar for the Rs 150-bn SAIL-ArcelorMittal auto grade steel JV

Bhubaneswar: Odisha, home to steel manufacturing units owned by Tatas, Jindals and others, is being considered as one of the potential locations for an automotive grade steel plant proposed jointly by ArcelorMittal and Steel Authority of India Ltd (SAIL).

SAIL has written to Odisha industries secretary Sanjeev Chopra, evincing interest to locate the auto grade steel facility in the state.

"The decision of site selection for the proposed unit would be taken based on the advice of relevant experts, and after conducting due diligence taking into account the location, availability of manufacturing inputs, infrastructure and facilities as well as incentives and benefits made available by the respective state government. We appreciate your proposition and wuld keep Odisha as a prospective site to be considered for the proposed unit", said a letter to Chopra, quoting G Vishwakarma, director (projects & business planning) SAIL.

Chopra was not immediately available for his comments. 

Both the joint venture (JV) partners have been scouting for a suitable location for the project. ArcelorMittal and SAIL entered into memorandum of understanding (MoU) in May 2015 to explore the possibility of setting up an auto grade steel manufacturing facility. The size of the deal is estimate at Rs 150 billion. Initial capacity of this plant is envisaged at 1.5 million tonne per annum (mtpa) but it can be expanded to 2.5 mtpa.

Currently, a joint feasibility study is underway. Based on the outcome of this study, both the project proponents will proceed on other steps such as formation of JV company and site selection. The zeroing in of the site would depend on availability of manufacturing inputs and infrastructure and also the suite of incentives on offer by a state government.

Odisha's case for hosting the proposed auto grade steel facility seems compelling since inputs for the plant are to be sourced from the new hot strip mill at SAIL's Rourkela unit, thus making the entire value chain indigenous. The proposed JV plant will construct world-class facilities for manufacturing automotive steel that will offer technologically advanced steel products for India’s rapidly growing automotive sector. 

But ArcelorMittal's interest for a steel facility in Odisha is beset with uncertainty given its bitter record of setting up a mega greenfield steel project in the state.

Alongside Posco, ArcelorMittal was a big ticket investor, pledging Rs 400 billion on a 12 million tonne steel plant at a site close to iron ore laden Keonjhar. But, protracted delays in land acquisition, uncertainty in securing captive iron ore deposits and law & order flare ups led the world's biggest steel maker to mothball it's Odisha plant in 2013.

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