The Hindu Business Line : Problems in equipment supply may hit SAIL expansion

Chennai, Aug. 25 Steel Authority of India Ltd, the country’s largest steel producer, has expressed concern over likely delays in its expansion projects due to problems in equipment supply.

In its 2007-08 annual report, the company has said that there are only a limited number of equipment suppliers for steel plants.

The order books of steel plant equipment suppliers is overbooked, which has exposed SAIL to the risk of higher project cost due to lack of competition among suppliers.

“In addition, the overbooked order position could also result in delay in supply of equipment,” it said.

According to the annual report, SAIL has undertaken a modernisation-cum-expansion plan to increase capacity of hotel metal production to 26 million tonnes by 2011 from 15 million tonnes now. Contracts for expansion plans of IISCO Steel plant and Salem Steel Plant have been awarded.

The modernisation and expansion plans of other integrated steel plants have been given in-principle approval and are at various stages of implementation.

The contracts for about 30 per cent of the total modernisation and expansion plan have so far been awarded, according to the report.

Raw material security

The annual report highlights SAIL’s efforts to ensure raw material security, especially when its expanded capacity goes on stream.

It stepped up production of iron from its captive mines to 26.37 million tonnes in 2007-08, while the production of limestone and dolomite increased to 2.6 million tonnes.

According to the annual report, SAIL’s requirement of iron ore is to go up to 42 million tonnes after the modernisation and expansion programme.

To meet the higher level of iron ore requirement, linkages have been formulated between plants and mines and plans have been drawn up to develop the mines.

Chiria mines

It has taken up the matter of delay in renewing the lease for the Chiria mines with the State and Central governments.

SAIL has taken steps to increase production of both coking coal and thermal coal in captive mines.

SAIL has applied for prospecting/mining lease in new areas for iron ore, manganese ore, nickel, chromium ore in Jharkhand and Orissa, according to the annual report.