India’s Ministry of Steel has decided to ramp up the capacity of state-owned Steel Authority of India Limited (SAIL) by around one million mt per year through capital expenditure and the revival of one of the latter’s wholly-owned subsidiaries, a ministry official said on Thursday, July 5.
The official said that the government has decided to reverse its decision taken about two years ago to hive off Visvesvaraya Iron and Steel Limited (VISL), a subsidiary of SAIL, and instead SAIL will make an additional investment to revive VISL’s steel mill located in the southern Indian state of Karnataka.
According to the official, as per the usual rule of thumb, the setting up of a one million mt greenfield steel mill will entail an estimated cost of around $900 million, though, with the replacement of the ageing plant and equipment of VISL, additional steelmaking capacity could be achieved through much lower capital expenditure.
SAIL and the government’s steel industry consultancy firm Mecon Limited has been directed by the Ministry of Steel to prepare a detailed project report on the revival of VISL along with estimates of the fresh investments that will be necessary to add one million mt capacity to the SAIL subsidiary, the official added.
To further bolster the future viability of VISL, the Karnataka government has decided to allot a captive iron ore mine to the company.
VISL’s plant constructed in 1923 had an installed capacity of 400,000 mt per year along with alloy and special steel production facilities.