Angul, March 17: Jindal Steel and Power Ltd (JSPL) is going ahead with the Rs 30,000-crore, 6-million-tonne steel and power project at Angul in Odisha despite not having access to iron ore mines.

The Naveen Jindal company will complete setting up a 1.8-million-tonne (mt) capacity in the first phase in the next 3-4 months. Orders to build the next phase of 4mt capacity are also in place.

“We do not want to commit investment unless absolutely sure about mines in our steel and power projects. However, in Odisha, it is not the case,” Ravi Uppal, managing director of JSPL, said.

The company is banking on twin initiatives to reduce dependence on captive ore.

First, it is building three pellet plants across Odisha to use low-quality fines (iron ore dust) to make steel in electric arc and blast furnaces.

Second, it is using coal from a captive block to produce cheap power and make syngas for iron ore.

“We do not have access to natural gas. But the eastern region has lots of coal which we will use to make syngas, substituting natural gas,” V.R. Sharma, deputy managing director and CEO (steel) of JSPL, said.

Syngas, which is a combination of carbon monoxide and hydrogen, is blown over pellets to make direct reduced iron, which is put in the electric arc furnace to make steel.

In the first phase, syngas will be used to produce steel. The next phase, which will use a blast furnace, will come up by 2015. The company has also made operational a large part of the power plant.

Sharma said syngas was being used for the first time in such a large scale to make iron ore. Germany’s Lurgi is JSPL’s technology partner.

However, the company is yet to get the mining lease for the Utkal B1 coal block allocated for the steel and power plant. JSPL officials claimed the lease could be granted “very soon”.

Ore count

To address the problem of iron ore, JSPL has built a 4mt pellet plant near a pithead at Barbil. It is building another unit at Barbil, besides a 7mt plant at Angul.

“Around 80-90 million tonnes of fines are lying in dumps in Odisha. So, getting fines will not be a problem,” Sharma said.

Observers said JSPL’s move was bold given the uncertainty in the domestic mining sector.

Sharma agreed. “It is certainly a bold decision to put up the steel plant using coal-to-gas technology on the part of Naveenji,” he said.

The Congress MP and the youngest son of .P. Jindal seems to be taking a calculated risk here.

Jindal Steel is in the queue for the allocation of an iron ore mine in Odisha having 200mt deposit. Odisha Mining Corporation has agreed to supply ore to JSPL till it gets the mine but at market price.

For another 3mt plant at Patratu in Jharkhand, JSPL is awaiting mining access before committing investment.

It will apply the same principle for developing a Rs 55,000 crore coal-to-liquid project at Odisha. Uppal said the company would invest only if it was assured coal availability from the Ramchandi block.

The correspondent was on a sponsored trip to Angul