Published On:January 13 2025
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Telangana Urged to Adopt AP Model for Setting Up Integrated Steel Plant.

A decade after the promise of a mega steel plant during the bifurcation of states, Telangana is still awaiting the establishment of the integrated steel plant that was assured under the Andhra Pradesh Reorganisation Act of 2014. In a recent development, the central government has urged the Telangana government to scout for a private partner to set up the project at one of the two shortlisted sites in Mahbubabad, which are located near key iron ore mines.

Telangana Chief Minister A. Revanth Reddy raised the issue again during a visit to Delhi, stressing the need for the steel plant. In response, the Centre suggested that the state follow the model adopted by Andhra Pradesh, where the government partnered with private investors to establish a steel mill.

Sources indicate that two sites in Mahbubabad are being considered, both of which can source iron ore from the Ramandurg or Donimalai mines. Iron ore is a crucial feedstock for steel production, with about 1.5 tonnes of iron ore required to produce one tonne of steel.

In contrast, Andhra Pradesh has attracted interest from AMNS India, a joint venture between ArcelorMittal and Nippon Steel, which is planning to build a 17.8 million tonnes per annum (mtpa) steel plant at an estimated cost of ₹1.5 lakh crore. This project is expected to be completed in two phases, with discussions involving the state government and the Ministry of Steel already underway.

During meetings between Telangana government officials and the Union Home Ministry, it was noted that the Ministry of Steel could play a role in promoting the project and facilitating a feasibility study by Steel Authority of India Limited (SAIL). However, Telangana is also encouraged to explore the possibility of setting up the plant in collaboration with a private company, following Andhra Pradesh's model.

The general industry rule suggests that establishing a one-million-tonne steel plant requires a capital expenditure of approximately $1 billion using the blast furnace route. SAIL previously rejected a proposal to set up the steel plant in Khammam district, citing feasibility concerns.

According to an anonymous source, the Ministry of Steel's mandate was to assess the feasibility of establishing an integrated steel plant in Khammam, but it was deemed "not feasible." A consultancy firm, MECON, had earlier recommended Mahbubabad as a potential site. In 2019, Mahbubnagar was also considered, due to its proximity to Karnataka, a region rich in iron ore.

The Telangana government is particularly interested in securing captive mines through the Mine Developer and Operator (MDO) route for one of the Mahbubabad sites. For the other, the government is exploring the option of purchasing iron ore at market prices. Additionally, the Mines Ministry has been requested to allocate around 176 million tonnes of iron ore to the Telangana Mineral Development Corporation (TGMDC) Ltd. for the project.

HBL





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