Tata Steel Optimistic About Meeting Greenfield and Brownfield Project Deadlines

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's leading steel producer Tata Steel Limited (BSE:500470) (Mumbai) has reported that the 47% capacity expansion program under way at the company's Jamshedpur facility in Jharkhand is progressing on schedule and will be completed in March 2011. On completion of the almost $3.4 billion project, the capacity of the plant will increase from 6.8 million tons per year to 10 million tons per year. In June 2010, the company obtained the necessary clearance for the project from India's Ministry of Environment and Forests.

The project is part of a larger expansion plan that envisages a production capacity of 16 million tons per year by 2014. The total investment for the entire project is estimated to be more than $9 billion, which will be raised through internal accruals and debt. The ongoing project will see the production of flat steel rise from 3.04 million tons per year to 5.83 million tons per year. Flat steel is largely consumed by consumer durables industries and the automobile industry.

Among its other ongoing projects, Tata Steel is currently setting up a 6 million-ton-per year greenfield steel plant on a 40-acre site at Kalinganagar, in the Jajpur district of Orissa. The 3 million ton-per-year first phase of the project is expected to be commissioned by March 2014. The company has already invested more than $338 million in the project. Equipment orders of about $1.4 billion have been placed, and equipment for the steel melting shop and blast furnace has already been procured. About 60% of the required land has also been acquired by the company.

The memorandum of understanding for the project was originally signed in 2004, with a scheduled project completion date of 2010, but strong local resistance did not allow the project to progress. However, a peaceful atmosphere is gradually being created, and the company has been able to move ahead with the project. The company is currently focusing on rehabilitation, resettlement and land acquisition.

Tata Steel also expects to commission its proposed 50,000-ton-per-year ferroalloys plant and 40,000-ton-per-year bar mill at the Gopalpur Industrial Park in the Ganjam district of Orissa by March 2013. Raw materials for the ferroalloys plant, which would be a backward integration project for the steel plant at Kalinganagar, will be sourced from the company's chromite mines in Orissa's Sukinda Valley. Ingots for the bar mill will be sourced by rail and road from Jamshedpur. When completed, the Gopalpur ferroalloys plant will be Tata Steel's third such plant in Orissa. The company currently operates two ferroalloys plants, each with capacities of 50,000 tons per year, at Bamanipal and Athgarh.

Tata Steel is developing the Gopalpur Industrial Park to enable industrial development of the region. The company will be an anchor tenant at the park and plans to invest about $225 million on the two proposed plants. The plants are expected to create employment opportunities for about 1,000 people. The complete industrial park is expected to attract between $2.3 billion and $3.4 billion in investments in sectors such as engineering, chemicals, steel and its allied downstream industries. Tata Steel also plans to set up a desalination plant and utilize the easily available seawater. The company will be recycling 100% of the water and will also set up rainwater-harvesting facilities. The groundbreaking ceremony for the park was performed in August 2010, and work on the boundary wall is under way.

After a recent meeting with Orissa Chief Minister Naveen Patnaik , Tata Steel Managing Director H.M. Nerurkar told the media, "Our industrial park project at Gopalpur is scheduled for commissioning between October 2012 and March 2013. Similarly, the Phase I of the Kalinganagar steel plant is expected to be operational between November 2013 and March 2014." He added, "I apprised the Chief Minister on the status of our projects at Gopalpur and Kalinganagar. The land-leveling work for the Kalinganagar plant is under way, and the company has gradually been able to build more confidence."

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