STEEL WILL

Kalinganagar (Orissa), Feb. 5: Mesco Steel Group plans to invest $2.8 billion in expanding its steel making capacity to 10 million tonnes (mt) by 2014.

It also plans to foray into wire rods, steel rebars and slabs to cater to the booming infrastructure segment.

Mesco Steel will invest around $1.2 billion in Mideast Integrated Steels Ltd to turn Mideast’s pig iron plant into a steel facility of 3.5mt capacity.

It has an 88.5 per cent stake in Mideast.

Mesco Steel managing director Rita Singh said another $1.6 billion would be invested in the other group company, Mesco Kalinga Steel Limited, to set up a 3mt steel plant in the first phase, which could be later expanded to 5mt.

She said the group had acquired 800 acres for the greenfield plant of Mesco Kalinga.

The group has set a target of increasing its pig iron production to 7 lakh tonnes from 4 lakh tonnes in the next fiscal.

Singh said, “We are working towards financial strength and have cleared the dues of almost 90 per cent of our secured creditors.”

Both Mideast and Mesco Kalinga’s projects will be completed by 2010-11, she said.

“The funds will be raised through a mix of debt and equity. While in Mideast, we expect the debt-equity ratio to be around 1.5:1, in Mesco Kalinga it will be 2:1,” she said.

The group is also planning another 2mt steel plant, for which Singh did not give any time frame.

It has two iron ore mines near Barbil in Keonjhar district of Orissa.

The iron ore from these two mines will meet the needs of the group’s steel operations.

Around 4.2mt of iron ore is obtained from one mine at Barbil. There are plans to get around 5-6mt of the ore by the end of the next fiscal.

The second mine of the group at Barbil has around 240mt of high-grade iron ore reserves.

“As part of the long-term strategy of the company, we expect to be able to mine around 30mt of iron ore in the next five years after environment clearances,” Singh added.