Calcutta, Jan. 15: Graphite India Ltd, the fourth largest manufacturer of graphite electrode in the world, is planning a capacity hike to grab a bigger slice of the booming graphite market.

The company will set up a a 20,000-tonne facility, which will raise production to 1 lakh tonnes with an estimated investment of Rs 200-250 crore. . The company now has two plants in India.

The graphite electrode industry globally is on an upswing at the moment, coming out of a five-year recession witnessed during 1998-2003 when prices declined to half of the previous peak.

The one-year contract price in 2006 is hovering around $3,000, up from $2,600 a tonne last year and $2,200 a tonne in the year before.

Graphite electrode is a highly consolidated industry with 8-9 players in the world. The main raw material, calcine needle coke (CNC), is also in tight supply with very few having the technology to make it.

“The industry dynamics restrict capacity additions. However, we will go for brownfield expansions,” K.K. Bangur, chairman of Graphite India Limited, told The Telegraph.

The company is looking at Durgapur and Nasik to set up its third facility. Bangalore has been ruled out because of environmental reasons.

Graphite India also intends to roll out value-added products from the new lines.

It has recently increased production at Durgapur from 14,000 to 34,000 tonnes with a Rs 170-crore investment.

With the prices of the basic feedstock, CNC, going up along with graphite electrode prices in the international as well as the domestic markets, Graphite India is trying to put a tab on its other costs, such as power.

Electricity contributes nearly 30 per cent of the company’s total production cost.