Jindal Steel and Power Ltd (JSPL) is exploring the possibility of setting up a steep plant with capacity of 2-2.5 million tonnes (mt) per annum at Patratu in Ramgarh district of Jharkhand. At Patratu, the company currently has a wire rod mill of 0.6 mtpa and a bar mill of 1 mtpa capacity with rebar service centre.
According to Hervinder Singh, President - Mining and International Projects, JSPL, the proposed brownfield project is in the “active consideration” stage and will entail backward integration by setting up a steel making unit.
“A blast furnace project in Patratu is in active consideration. The raw material is available and we want to produce steel and feed to the mills there. So, a 2-mt plant at Patratu is in strong conceiving stage. In fact, the basic engineering has already been done and we are just waiting for the right time to take off,” Singh told BusinessLine on the sidelines of a seminar on infrastructure and housing organised by the Calcutta Chamber of Commerce here recently.
The project, if undertaken, will require an investment of “a few thousand crores”, he said. Once plans are firmed up and work begins, it will take between two and three years for the plant to become operational.
Rise in production
For the financial year 2019-20, JSPL had set a production target of 6.5 mt of steel from its India operations, and 1.8 mt of steel from its plant in Oman. According to information available on the investor con-call, JSPL is hopeful of surpassing this and achieving a production of more than 8.3 mt by the end of this fiscal.
JSPL’s 1.8-mtpa coal gasification-based direct reduced iron (DRI) plant at Angul district in Odisha resumed operations in January this year. The plant was not operational for long due to scarcity of coal. With the DRI plant now operational, the company is hopeful of achieving an additional production run-rate of 1.50 mt of steel in FY21.
On the possibility of further capacity expansion, Singh said, the Angul plant, which currently has a capacity of 5 mt, could be scaled up to 20-30 mt by 2030-35.
“We are looking at Angul expansion in a big way. If we have more capacity in one location, then there is an advantage of scale of operations. The Angul plant has all the advantages, including availability of minerals, coast, and world-class technology,” he said.
The plan is, however, currently “sketchy” and the company would first focus on consolidating its operations before venturing into the next phase of expansion.
“We have grown significantly in the last 10 years. So, that has to be consolidated. We will not go for any capex unless we are in a position to take that load. We hope to be able to perform really well in the next financial year. We are already in the growth momentum, and our results in the last quarter have been good. It is too early to comment on expansion. It is currently in the thought process,” he said.
Better demand and firm prices
There has been good pick-up in demand and the company is bullish on infrastructure and construction sectors, Singh said.
JSPL has surpassed all its records in terms of production in the last quarter and is looking at “a better quarter” in March this year.
Though there could be some ups and downs due to the recent outbreak of coronavirus, prices are likely to hold for this month. The company increased prices across the board by close to ₹500 a tonne in March this year.
“There has been no impact on prices. Rather, we have increased prices by ₹500 a tonne in the current month. I believe that in long steel there is no impact because India has full potential of growth,” he said.
However, it would be difficult to predict whether there would be a price hike in April, he added.