Calcutta, June 13: Public sector Rashtriya Ispat Nigam Ltd (RINL) is in "active discussion"' with the Odisha government to set up a mega steel plant in the state.
The company plans to be part of two separate special purpose vehicles with state government firms and a central undertaking to implement the project, P. Madhusudan, chairman cum managing director of RINL, said.
While one of the SPVs will take up mining work, the other will build the steel plant. At any stage, any of the consortium partners can sell its stake to private firms and exit the venture.
"Odisha Mining Corporation and NMDC are being considered for the mining SPV. In the steel project, Industrial Development Corporation Orissa and RINL will be partners along with NMDC," Madhusudan said.
RINL also wants a stake in the mining project, he added. "We are in active discussion for the ventures. The first step would be to sign a memorandum of understanding followed by an agreement," he said.
The project is part of a plan mooted by the Union steel ministry, the administrative ministry of RINL, to scale up steel production in India. Three more projects are being planned in iron ore bearing states such as Jharkhand, Chhattisgarh and Karnataka.
The move to involve state entities is based on the experience of the last decade when large steel projects by domestic and international steel makers such as Tata Steel, ArcelorMittal, Posco, JSW Steel failed to take off in absence of mining rights and trouble over land acquisition.
"Presence of state entities in both the mining and the steel projects is likely to sufficiently encourage these states to confer iron ore lease and allocate land for the projects," a steel industry veteran said while explaining the ministry move.
Coal block bid
Madhusudan said RINL might participate in the coal block auction proposed by the Centre in August for the unregulated (steel/cement) sector. Ten mines will be up for grabs in this round. "We may participate in the auction. However, even if a firm gets a mine in auction, it would not get the same cost advantage that companies with older captive mines enjoy. But this is the new reality and everybody must get used to it," he said.
Companies such as Tata Steel and SAIL have captive iron ore and coal mines compared with RINL, which buys both the raw materials from the market. To acquire a mine through competitive bidding a firm has to pay top dollar, compared to older players who received allocation for a song.
RINL now operates a 3-million-tonne steel plant in Vishakhapatnam. The capacity will go up to 7.3mt by end of 2017.
