Jindal Steel Plans $500 Million Coal-Gasification Plant in Orissa

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jindal Steel and Power Limited (BSE: 532286) (JSPL) (New Delhi), a flagship company of the $10 billion OP Jindal Group and one of India's leading steel producers, has announced that it will build a plant for coal gasification at the site of the upcoming 6 million-ton-per-year steel plant in Angul in the eastern state of Orissa. The gasification plant is estimated to cost $500 million.

JSPL has signed a technology-sharing agreement with Lurgi GmbH (Frankfurt, Germany) to produce syngas from coal using "fixed-bed dry bottom coal gasification" technology. The syngas will replace natural gas used in the steel making process. The quantity of syngas generated will be sufficient to act as a reducing agent in the production of direct reduced iron. The syngas will also be used as a fuel in other plants at the facility.

JSPL's initiative to install the coal-gasification plant is being viewed as an environmentally friendly move. Further, usage of coal gas will bring down the cost of manufacturing steel significantly, and the company will be able to use domestic coal instead of imported coking coal. Non-coking coal is abundantly available in India, with the Talcher region in Orissa housing plentiful reserves. Coal gasification technology also offers the added advantage of absorbing almost 100% of produced sulfur and prevents emission of the harmful gas into the atmosphere.

The first phase of the upcoming integrated steel facility, which is designed to have a capacity of 3 million tons per year, is slated to be operational by the end of 2010. The cost of the first phase is estimated to be $3.1 billion. JSPL plans to commission the second phase of the project by 2011. The second phase will add capacity of 3 million tons per year. Upon completion, the facility will be the largest integrated steel plant in India. The complex, consisting of a steel plant, power plant, and residential township, will be spread over an area of 5,750 acres, 93% of which is barren. The company has already acquired nearly 2,000 acres of land.

JSPL plans to invest more than $8 billion in Orissa to produce 12.5 million tons per year of steel and 2,500 megawatts of electricity during the next 10 years. The company has made good progress in securing coal and iron-ore supplies for the proposed investment.

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