NMDC to set up 5 MT plant in K'taka with Russia's Severstal

Although the companies did not give the project cost, sources said it could be around Rs 25,000 crore, with the Russian company initially putting in about Rs 4,500 crore.

Officials said it will be the first JV between the companies of two countries for making steel.

The 50:50 joint venture will have a captive coking coal mining unit in Russia and an iron ore mining unit in India to ensure the regular flow of raw material critical to the Karnataka plant, likely to go on stream in 2015.

"The plant will have an initial capacity of 2 million tonnes per annum (MTPA), which is expandable to 5 MTPA," NMDC Chairman Rana Som said at the MoU(Memorandum of Understanding) signing ceremony here.

The work on the project will begin in 2012, Som said, adding that the exact investment requirement for the project will be assessed in a month's span when the detailed project report would be ready.

Sources said, meanwhile, that the plant will entail an expenditure of about Rs 25,000 crore, and Severstal's initial investment would be USD 1 billion (about Rs 4,500 crore).

Som said Severstal, which is among top 10 global steelmakers and has mining assets in Russia, Europe and US, will provide technology and coking coal for the venture, while NMDC will ensure infrastructure and iron ore.

Karnataka government has already alloted 2,500 acres to NMDC for the project, he said.

"The signing of this MoU is an important strategic development for us as it will establish the steel plant in one of the most attractive growth markets in the world with Indian economy poised for 9 per cent growth," Severstal CEO Alexey Mordashov said.

"We are committed to provide raw material to the company," Mordashov said, adding that initially the coking coal supply would be restricted for the project.

Som said for a 2 million tonnes per annum (MTPA) project initially, equal quantity of coking coal would be imported.

On completion of the project, Som and Mordashov said that usually a new project took 3 years from start of construction work, which will begin in 2012.

Steel Secretary PK Misra said that this is the first joint venture for steel-making between Russia and India, as earlier projects were technical collaborations.

India is poised for an economic take-off with a GDP growth of 8.5 per cent to 9 per cent, which opens up a great opportunity for steel makers to make investments in India, he said.