NMDC, the country’s largest iron ore miner, will soon invite expressions of interest (EoIs) from prospective public and private steel companies in acquiring majority stakes in four identified mega steel projects with capacity of 10-12 million tonne each.
NMDC, which has been nominated as the nodal agency to bid out public-private partnership (PPP) project in the steel sector, has identified lands in the states of Jharkhand, Odisha, Chhattisgarh and Karnataka and will start bidding process for at least two mega steel plants this fiscal.
?We have identified location in all the four iron ore-rich states and are currently talking to the state governments for transfer of land and devising the model for the proposed initiative to be implemented under a special purpose vehicle (SPV) route. The size of the mega steel plants to be put under the bidding route soon to prospective enterpreneurs will depend on the linked iron ore resource provided by state mineral corporations,? NMDC chairman and managing director CS Verma said.
Though the contours of the model is still being finalised, sources said that the mega steel plants would be largely designed on the lines of ultra mega power project (UMPP) scheme the power sector with NMDC acting as the nodal agency that would get all clearances for the projects before putting it under the bidding routre. It is understood that depending on the size of the iron ore resource attached with a project, state mineral corporations (who would provide the ore) may be offered between 26 to 49% holding in the SPV while steel producing companies can pick up the majority 51% stake.
NMDC, which may also be a major merchant miner for these steel projects is yet to decide whether it would also hold anywhere between 10% to 26% stake in the project or just remain a supplier of the raw material.
The move towards putting in place a PPP mechanism for mega steel plants in the country is being pushed to accelerate the pace of steel manufacturing in the country with the aim of reaching the production target of 300 million tonnes by 2025.
Though the contour of the bidding framework is still to be worked out, it is likely to take into account upfront payment by companies, royalty on minerals, technology employed and time taken to complete the project.
The mega steel project is expected to revive interest in greenfield projects for steel majors such as Tata Steel, Arcelor Mittal, Posco, JSW Steel that are grappling with severe land acquisition problems, raw material security issues and environment and forestry clearances. In fact, POSCO and Arcelor Mittal announced withdrawal of their proposed steel projects in Karnataka and Odisha respectively.
The idea of mega steel project is to rapidly increase steel making capacity in the country and feed the growing demand for primary and secondary steel products from other manufacturing industries. The current steel production in the country stands at 90 million tonnes.
Global steel demand grew only 2.1% in 2012 compared with 6.2 per cent in 2011. Global steel production inched up 1.2 per cent to 1.54 billion tonnes in 2012, registering the lowest growth of the last four years. Capacity utilisation also suffered and was lower than in 2011.
