The Hindu Business Line : SAIL plans to expand capacity to 20 mt in 8 years

THE Steel Authority of India Ltd (SAIL) proposes to expand its production capacity by around 66 per cent over the next eight years to 20 million tonnes per annum by the financial year 2011-12 from the present 12 million tonnes.

The public sector steel major is in the process of giving a final shape to the mega expansion plan. It is expected to be finalised within the next three to four months.

Speaking to Business Line, the SAIL Chairman, Mr V.S. Jain, said: "By 2011-12, we intend to expand our production capacity to 20 million tonnes. The corporate plan is under discussion at present, and we will be able to finalise it within the next three to four months."

SAIL being a public sector undertaking (PSU) under the administrative control of the Ministry of Steel, the final plan will have to be approved by the Government, in particular, the administrative Ministry and the Public Investment Board (PIB).

Mr Jain, however, was non-committal on the proposed investment amount. "The amount that will be required to be invested will depend on what type of configuration we will build upon in different market segments and product-wise," he said.

The expansions will be carried out only in the company's existing locations and no greenfield project is envisaged, Mr Jain said.

According to industry estimates, the minimum investment required for such a brownfield expansion programme would be about Rs 13,000 crore-15,000 crore, depending on the technology, products as also the choice of going in for a new or a second hand plant. To increase the supply of raw materials for the targeted capacity expansion, the company is also working on plans to increase availability of iron ore and coal. While the existing facilities will continue to be in operation, "the company plans to develop the Chiria mines," Mr Jain said.

As far as coal is concerned, the SAIL Chairman said: "We will be looking forward to some enhancement in the supply from Coal India Ltd(CIL). We would also be looking for some long-term contractual arrangements with international suppliers."

SAIL may also invest in coal mining abroad to ensure secured supply of coal and coking coal. "We are also not ruling out participation in some coal capacities if it is actually needed," Mr Jain said.