NMDC to set up steel plant in Bellary

The State-run National Mineral Development Corporation (NMDC) and Russian steel maker Severstal are likely to sign a final agreement to set up a steel plant in Bellary by the end of this year.

“Both companies have appointed legal consultants to study the project structure, and based on inputs, both firms will sign an agreement,” N K Nanda, Chairman and Managing Director, NMDC, told Deccan Herald on Thursday.

He said meetings had taken place between the two sides and certain issues regarding land acquisition and procurement of water and power for the plant were being discussed.

In December 2010, the companies signed a memorandum of understanding to form an joint venture, but the final agreement was delayed as the issue of control was not addressed.

At present, it is a 50:50 joint venture, and the decision on control will be decided at the highest level, he said. He, however, refused to comment on whether the NMDC would give up its claim to control the company.

As per project details, he said Severstal would provide coking coal, while the NMDC would ensure iron ore linkages. The Rs 20,000-crore plant would start as a 3-million-tonne-capacity unit. The capacity will be later scaled up to 5 million tonnes. The plant, which will come up on 2,800 acres in Bellary, is expected to be commissioned by 2017.

The NMDC, currently with a capacity to produce 27 million tonnes of iron ore per annum, plans to increase the capacity to 46 million tonnes in 2014-15. It has already invested around Rs 2,000 crore to develop two mines - one at Donimalai in Bellary district, and another at Bailadila in Chhattisgarh, he said.

The NMDC supplies 90 per cent of its output to domestic steel mills such as JSW Steel, Essar Steel and Rashtriya Ispat Nigam, and exports the rest to steel producers in Japan and South Korea under long-term contracts.