ArcelorMittal Nippon Steel India’s play in the steel market is set to get bigger. The company is busy making plans that would increase its capacity by five million tonnes in the next three years while laying building blocks for the phase after.
Dilip Oommen chief executive officer ArcelorMittal Nippon Steel India (AM/NS India), said the groundbreaking for the expansion to 14 million tonnes was expected this year.
“In the next phase, we will take it up to 18 million tonnes,” he added. The two phases of expansion at Hazira, Gujarat, along with downstream, are expected to cost about Rs 50,000 crore. Hazira has a capacity of about 9 million tonnes.
For the expansion at Hazira from 9 to 14 million tonnes, AM/NS India has land. Acquisition of land for the second phase is underway.
“We have made very good progress with the Gujarat government,” said Oommen.
However, he pointed out that logistics would have to be in place for the second phase. That would entail enhancing port facilities, getting the railway line into the plant and improving road logistics. “Lot of work has already started,” he said.
The first phase would be completed in three years. For the second phase, AM/NS India has an option of taking up Hazira or starting construction of a new plant in Odisha.
“We will have to decide appropriately. There are many options and we will have to select the right option,” explained Oommen.
In March, AM/NS India had signed an MoU for a 12-million tonne integrated steel plant at an investment of Rs 50,000 crore, in the presence of ArcelorMittal executive chairman Lakshmi Mittal and Odisha Chief Minister Naveen Patnaik.
Oommen said, “In Odisha, we are in active discussions with the government for setting up a 12 million tonne plant. We have specialists from all streams working on this right now and land acquisition process is on.”
Even as the major growth plans are being charted, an investment of Rs 14,500 crore is underway at Hazira and Odisha.
Growth plans would also entail inorganic opportunities. AM/NS India has submitted an expression of interest for Neelachal Ispat Nigam Ltd (NINL), which is being privatized by the government.
“We are open to all opportunities that may come up in the future. We are very closely studying opportunities and we will participate,” said Oommen.
Clearly, the joint venture of world’s leading steel companies – ArcelorMittal and Nippon Steel – is betting big on India. The companies jointly acquired Essar Steel under the insolvency code for Rs 42,000 crore in 2019.
Last week, AM Mining India’s resolution plan for Uttam Galva Steels – a downstream unit – was approved by the committee of creditors and the resolution plan has been filed with the National Company Law Tribunal (NCLT).
Oommen said that there could be mothballed assets in the plant that need to be put back on line. “The plant has done well, but there is scope for improvement and potential for capacity to go up,” he explained.
The last one year has worked out well for steel companies as demand improved and prices surged. All major domestic steel producers are restarting expansion plans and by FY24, 29 million tonnes of additional capacity is expected to go onstream, excluding AM/NS India’s expansion.
Oommen, however, reminded that steel was a cyclical industry. “Right now, it’s a good market. But it has also seen bad times,” he said.
He also said that Indian steel prices were the lowest in the world. Steel companies increased prices this month, but there is still a gap of about Rs 8,000 a tonne for hot rolled coil – a benchmark for flat steel – with landed cost of imports.
Source : Business Standard
