IRON and STEEL
According to reports, UK headquartered Arcelor Mittal is planning to build up a new integrated steel facility of capacity 3-6 MnT at Paradip port in Odisha. Only recently Arcelor Mittal has received approval from the Essar Steel’s lenders to take over the company with its resolution plan of INR 42,0000 crore.
However, this plan to set up a new facility in Odisha is a part of company’s long-term plan to raise Essar Steel’s annual steel-making capacity to 12-15 MnT per annum. The total investment estimated in the same is about INR 8,000 crore and this investment will be over INR 42,000 crore resolution plan to acquire Essar Steel.
The first stage of the plan includes completion of ongoing capex projects that include a coke oven (1.35 mtpa), a second sinter plant (1.7 mtpa), third thin slab caster (1 mtpa), Paradip pellet plant (6 mtpa) and Dabuna beneficiation plant (4mtpa). It would also include an environmental management plant and infusion of best practices in raw material sourcing, plant operations, sales and product mix, people management, and health and safety.
Whereas in the second stage, Arcelor Mittal plans to increase its capacity to 8.5 MnT by 2024. ArcelorMittal hopes to commission additional assets including a 1.2 mtpa coke oven, a 4 mt blast furnace and a 5.2 mt basic oxygen furnace to raise the capacity.
It also wants to use land potentially available at Paradip to add the new iron and steel making unit. In order to minimise production loss, the plan involves making the DRI modules electric arc furnace inactive when the new integrated plant assets are commissioned in 2021-22.
Mittal is known to have built his career on buying out stressed steel mills across the world—in Mexico, Romania, South Africa, and the US—and turning them into profitable ventures, usually by ramping up volumes just in time for the upward steel cycle and controlling costs. Even as Arcelor Mittal battles to gain control of Essar Steel in India, it is simultaneously acquiring Italy’s Ilva, Europe’s largest steelmaker by capacity. However, with the Arcelor Mittal’s entry in the Indian steel sector, the existing private players will have to face increased competition making them increase their efficiency and control costs.