Steel Min for 8-10 MT ultra mega steel projects in 5 states

The move to set up mega steel plants is aimed at meeting demand-supply deficit in the steel sector.

"We are considering a proposal by our joint plant committee to set up 8-10 million tonnes (MT) capacity ultra mega steel projects (UMSP) in Jharkhand, Chhattisgarh, Orissa, Madhya Pradesh and Karnataka which have rich iron ore deposits," a top steel ministry official said.

The need for UMSPs was felt in the wake of rising demand-supply gap and failure of mega projects to come up due to regulatory and other hurdles.

"Mega projects of ArcelorMittal and Posco are still facing problems. Under such a scenario, the ministry is actively considering a proposal by its joint plant committee for setting up UMSPs," the official said.

The joint plant committee has also proposed a Steel Finance Corporation (SFC), on the pattern of Power Finance Corporation, to address the financial needs of such plants. Each of the such plants, to be built on fast track basis using super critical technology, may cost in the range of Rs 40,000-50,000 crore, the official said.

A high-level panel, headed by Steel Secretary PK Misra, may look into the various aspects of proposals tomorrow. Once the proposal is cleared, the ministry will begin the process of identifying projects, land acquisition, coal and ore linkages, water availability etc before bidding out the projects, the official added.

While the demand for steel is growing at an annual rate of about 10 per cent, production growth is only about 8 per cent. At present, the entire domestic production is consumed within.

The steel ministry envisages a production capacity of about 120 million tonnes per annum by 2012, an ambitious target considering the present capacity of about 78 MT only. The domestic industry, which has an investment of about Rs 11 lakh crore in the pipeline, faces multiple challenges like green clearances and tribal protests, besides delays in allocation of iron ore and coal mines to feed projects.

South Korean major POSCO had entered into an agreement with Orissa in 2005 for setting up a 12 MTPA plant at an investment of Rs 54,000 crore, billed as the country's largest FDI. But the work is still to start on the project.

Similarly, the world's largest steel maker ArcelorMittal had entered into an pact with Jharkhand government in 2005 and a year later with the Orissa government to set up plants of 12 MTPA, each at a total investment of about Rs 1 lakh crore, which too are still to take off.

To meet the country's growing energy needs, the government is pushing the ultra mega power projects that utilise super-critical technology and have a capacity of about 4,000 MW. These are being developed on built, own and operate basis.

As many as 16 UMPPs have been envisaged and each would cost about Rs 16,000 to 20,000 crore. Among them, Tata Power's Mundra UMPP is expected to start generating power later this year while Reliance Power's Sasan project's first unit is anticipated to be commissioned in 2013.