Indian Joint Venture to Build 300,000-Ton Coke Oven Battery and Power Station

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Steel Authority of India (BSE:500113) (SAIL) (Kolkata) and Kudremukh Iron Ore Company Limited (KIOCL) (Bangalore, Karnataka) are forming a joint venture to construct a 300,000-ton coke oven battery and a captive power station, with a total project investment of $72.5 million. Both companies are public-sector undertakings (PSUs).

The coke oven battery will enable KIOCL to run its blast furnace viably on a stand-alone basis and would function as a backward integration project. It was reported that SAIL's Bhadrvati unit also needs coke.

Currently, a draft memorandum of understanding (MOU) is under consideration by both companies. A final agreement is expected soon.

The coke oven project was originally planned by KIOCL, and it already has obtained environmental clearance from the Ministry of Environment and Forests and from the Karnataka State Pollution Control Board. The KIOCL board decided that a joint venture with SAIL should be explored in the interests of both companies.

The project is an element in India's expanding steel production supply chain, which SAIL chairman C.S. Verma said is likely to face a temporary over-supply situation.

"Substantial capacity additions are lined up in the next one to two years in the country, taking the capacity from the current level of around 90 million tons to around 135 million tons annually by 2015-16," Verma said. "The rise in production may lead to a temporary phase of oversupply; this is because, typically, the increase in capacities is in spikes, whereas [the] increase in consumption follows a relatively smoother trajectory."

For related information, see February 4, 2014, article - India Seeks Coking Coal Supply from Australia, New Zealand.

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