Calcutta, May 8: Jindal Steel & Power (JSPL) is in talks with German multinational SMS Demag for technical collaboration to increase its existing capacity.
The company plans to invest around Rs 550 crore in the expansion project, sources said.
Reports suggest that SMS Demag may consider picking up a token 5 per cent stake in the company. However, the company top brass refused to comment on this.
SMS Demag will supply one ladle furnace and two electric arc furnaces which would be installed by the middle of 2005.
SMS Demag has been part of the major modernisation programmes in the Indian steel plants, both in the public and private sector.
The company played a big role in the Rs 5,000-crore expansion of Durgapur Steel Plant of Steel Authority of India Ltd. It had a technical tieup with the Mittals-owned Ispat Industries as well.
The company had picked up a 5 per cent stake in Ispat Industries. Sources expect the same policy to apply to JSPL.
After the expansion, the new melt shop will use liquid hot metal, sponge iron and return scrap.
Sources said the German major will also supply key components for two dust collection plants as well as ancillary equipment.
JSPL is the largest producer of sponge iron in the country. The company also plans to set up a 1-million-tonne sponge iron plant in Orissa considering its interest in iron ore mining in the state.
The company has already thrown up a big challenge to the Bhilai Steel Plant, the most profit making unit under SAIL.
Bhilai Steel Plantís profits have so far come from its monopoly in manufacturing rails for the Railways. But now JSPL, which has set up a state-of-the-art rail manufacturing unit at Raigarh in Chhattisgarh, has already been successfully commissioned.
The plant has the capacity of manufacturing 120 meter long rails which are not available in any other plant in India.
Sources said the expansion, which will raise the capacity of direct reduced iron (DRI) in Raipur from 6.5 lakh tonnes to 1.3 million tonnes, is required to cater to the demand of its rail mills.
The company is also expanding the capacity of its captive power plant from 150 MW to 250 MW.
The project, which will run on waste gas, is expected to be completed in the next one year time, sources said.