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NMDC’s Chhattisgarh steel plant undergoing price revision

PW Bureau

The plant, which was first proposed in 2010-11 was earlier expected to cost $2.2 billion, but it has seen cost escalation at least once in all these years Hyderabad: State-owned National Mineral Development Corporation’s (NMDC) proposed 3 million tonnes per annum (mtpa) integrated steel manufacturing plant at Nagarnar, Chhattisgarh, which was first proposed in 2010-11, is undergoing a price revision. The plant, which was earlier expected to cost $2.2 billion, has seen cost escalation at least once in all these years. In its investor presentation, NMDC confirmed that investment for the plant was under revision.

Plant to contribute $1.7 billion to company’s top line

The plant is now to be commissioned between October 2019 and March 2020 and is estimated to contribute $1.7 billion to the company’s top line. “At 100 per cent capacity, the steel plant will contribute $1.7 billion (Rs 11,750 crore) to the company’s top line with earnings before interest, tax, depreciation and amortisation of 25 per cent,” NMDC noted. NMDC also said that the construction work for the plant is now in advanced stages. It will produce flat products like hot-rolled plates, sheets, coils, automotive steel and API grade steel.

The plant will provide a fillip to iron ore industry

“Targeted increase in steel capacity by more than double at 300 mtpa requires raw material of about 437 mtpa and provides a fillip to iron ore industry. NMDC with a current market share of 15-18 percent has great opportunity to ramp up its production,” NMDC said. It added that the public sector undertaking (PSU) was better placed to capitalise on opportunities in the iron and steel industry because it is the iron ore player with integrated mining solutions. The iron and steel industry is expected to grow at 7.4 percent CAGR.

Slurry pipeline plant to be commissioned in FY22

NMDC also said that the company’s slurry pipeline plant, which is being set up at a cost of about $415 million is in the first phase and is intended for transportation of pellet feed concentrate from Bailadila to Jagadalpur. It is expected to be commissioned in FY22. “Cost of evacuation from Bailadila sector to Vizag port to reduce by about 55 per cent from the current cost of $17 to $8,” the PSU noted.