New Delhi | Aug 17, 2016: Steel Authority of India Ltd, which had planned a 3-million-tonne steel plant at Khammam in Telangana as part of promises made by the Centre while bifurcating Andhra Pradesh, may instead set up a 1 million-tonne pelletisation plant in the southern state.
The proposed peletisation plant will depend on low-grade iron ore found locally in the Telangana region. Steel ministry officials said even the smaller pelletisation plant would be a financial strain on SAIL, which suffered a loss of Rs 4,137.25 crore in 2015-16 against a net profit of Rs 2,092.68 crore in 2014-15.
The 3mt steel plant proposal was set forth last year to satisfy a clause in the Andhra Pradesh Reorganisation Act, 2014. This clause, said SAIL, seeks to examine the feasibility of setting up an integrated steel plant in the state.
SAIL was asked to consider building the plant in a consortium with two other central PSUs at Khammam in Telangana. However, after extensive surveys it was found that local iron ore was not suitable to make high-grade steel.
Steel ministry sources said the option forwarded by the state to ferry iron ore over a long distance to the plant was not cost effective, especially because a whole new railway line would have to be built.
The move to ferry ore reminds officials of a similar move by an earlier Congress government led by Indira Gandhi to set up a steel plant at Salem, in Tamil Nadu, to placate the DMK. The party had a grouse that all big investments in steel were being made in eastern states.
Mohan Kumarmangalam, the then steel minister, announced the plant in his home constituency of Salem using iron ore found in the nearby Donamalai hills. However, the Donamalai ore was not commercially viable.
Salem, which has been a loss making plant despite making highly specialised steel, does not have any viable coal or iron ore deposits within 1,000 km of the plant. Steel made at Alloy Steels Plant, Durgapur, was sent by train to be melted down and rolled into stainless steel at Salem.
(Source: http://www.telegraphindia.com/)