SAIL on expansion drive, plans Rs 1.2 lakh cr investment

New Delhi: Steel Authority of India (SAIL), now ramping up capacity to 24 million tonnes per annum, plans to embark on next phase of expansion to raise it further to 50 mtpa by 2022 with Rs 1.2 lakh crore investment.

The state-owned steel maker, which currently has 14 mtpa capacity, said most of the planned expansion would be carried out through brownfield expansions in existing five steel mills, barring one proposed at Sindri in Jharkhand.

"Today we have 14 mtpa capacity. By the end of this year, our capacity will be 19 mtpa. By next year, our capacity will be 24 mtpa. Then, we are having our vision 2022, when 13th Five Year Plan ends, we will be having our capacity escalated to 50 mtpa," said SAIL chairman CS Verma.

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SAIL is now looking for expansion. Reuters[/caption]

"All these expansion would be at our existing facilities, barring Sindri where we plan to set up a 5.6 mtpa greenfield steel plant," he added.

Asked about the investments that would be required for the proposed expansion, he said it roughly takes $1 billion investment for one million tonne steel capacity addition.

"However, since most of the expansions would be carried out in existing plants, expenditure would be little less than what is considered as the thumb-rule. It would be around $20 billion," Verma said.

SAIL will start work on expanding the next-phase capacity addition as soon as the completion of the current phase of expansion, which will take company's steel-making capacity to 24 mtpa from 14 mtpa now.

"We will start work on increasing capacity to 50 mtpa as soon as the current phase of expansions is over next year," he said.

On the proposed Sindri plant, Verma said SAIL would go ahead with the project only after it gets encroachment-free 4,000 acres of land. SAIL has already got cabinet approval to set up the plant with about Rs 26,000 crore investment.

Verma said the project could be commissioned in four years from the zero date.

India currently ranks as the fourth largest steel-maker in the world with around 89 mtpa installed capacity, which is likely to go up to 150 mtpa by 2020 with investments from both public and private sectors.

The potential of steel demand in the country is huge as per capita consumption of the metal here, at 57 kg, lags far behind the world average of 214.7 kg and China's average of 459.8 kg.

Verma said SAIL's investment proposal is aimed at meeting the potential demand.

"In India, our per capita usage is very low -- it is 55 kg per capita against the global average of over 200 kg. I am quite convinced that there is lot of potential for higher steel consumption in India as development will happen only in the developing worlds like us," he said.

PTI