Published On:December 9 2017
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Scrap-based 1.5 MT steel plant to come up at Paloncha.

Union Steel Minister Chaudhary Birender Singh on Friday said the Ministry would establish a 1.5 million tonne scrap-based steel plant with an electric arc furnace at Paloncha, in the erstwhile Khammam district of Telangana. It is also in favour of taking the proposed joint venture of SAIL and ArcelorMittal for manufacturing high-end steel to Andhra Pradesh.

For the facility at Paloncha, a joint venture with the State government or a PPP mode are being considered. It will come on 450 acres belonging to the defunct 0.60 MT plant of Sponge Iron India there and NMDC has been advised to conduct a detailed study. The Minister said while hinting that the facility could be in addition to the integrated steel plant, at Bayyaram, committed under the Andhra Pradesh Reorganisation Act.

An integrated steel plant had also been proposed under the same Act in Andhra Pradesh, at Kadapa. The Ministry, he said, wanted the proposed JV of SAIL-Arcelor-Mittal, to make high-end steel used in automobile industry, to be shifted to Andhra Pradesh. Gujarat was the other State in race, but since east coast was considered a better choice it has been proposed to encourage the setting up of the plant, estimated to cost ₹15,000 crore, in Andhra Pradesh.

Welcoming the Ministry’s decision on the scrap-based steel plant, Telangana Minister K.T.Rama Rao reiterated the State government's demand for an integrated steel plant at Bayyaram.

He said the State government was ready to finance the mandatory one-third cost of around 155-km rail link, for transporting iron ore, from Bailadila in Chhattisgarh to Bayyaram. The cost of the railway line is estimated at ₹2,100 crore and would improve the project feasibility. The iron ore from the neighbouring State has a high 65% fe content as opposed to 45% fe content in those found in the nearby area.

Mr. Birender Singh and Mr.Rao were addressing the media. Earlier in the day, they participated in the diamond jubilee year celebrations of NMDC Ltd, in which Vice President M. Venkaiah Naidu urged the Ministry to explore options with regard to the integrated steel plants promised to the two Telugu-speaking States.

Recalling that a task force had been constituted, after two previous feasibility reports said the integrated steel projects were not feasible, the Union Minister said MECON Ltd was conducting another feasibility study and the report was expected within a month. The State governments would also be sharing details on survey being carried out to assess the iron ore and incentives they can extend for improving the IRR of proposed two facilities.

On the investment in the Paloncha facility, the Minister said it typically would be ₹6,000 crore for a 1 MT steel plant.

Noting that the proposed JV of SAIL and ArcelorMittal was in the offing for some time, Mr.Birender Singh said the agreement was likely to be signed “maybe within few days or within 1-2 weeks time”.


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