BS reported that when Steel Authority of India Limited’s chairman Mr CS Verma came visiting Salem Steel Plant in August 2010, what drew his immediate attention were the vast tracts of surplus land still at the unit's disposal in its post expansion cum modernization period.
In the wisdom of promoters in the 1970s, land was acquired much in excess of immediate requirements to provide for expansions in future. SSP, a stainless steel unit, is no exception with a land bank of over 3,900 acres.
Because of fund constraints, SSP was conceived on reverse integration basis that is the finishing cold rolling mill to come first to be followed by backward joining of a hot rolling mill and finally of a steel melting shop. It has now built capacity to make 180,000 tonnes of stainless steel slabs by installing an electric arc furnace, 364,000 tonnes of HR coils and 146,000 tonnes of CR stainless steel. The last phase of SSP expansion has cost SAIL close to INR 2,000 crore, the payback period of which will be eight years. The rapidity with which the market for stainless steel is growing here will, however, leave much scope for further expanding the Salem plant. Incidentally, even when the new EAF achieves full capacity use, SSP will continue to depend on Durgapur Alloys Plant for 190,000 tonnes of slab and thereby incur transportation cost of INR 2,500 a tonne.
Even after providing for further expansion, SSP will be left with much surplus land and Mr Verma wants that to be put to productive use. At one stage, a move was made to create a SEZ with units making stainless steel products. But the project was abandoned as the two prospective developers had doubts about its viability.
In the post Mr Verma visit, brainstorming about the surplus Salem land use has begun. The exercise could lead to the setting up of a special steel plant or a power complex or a direct reduced iron unit. But the exercise of the last option is linked to the Kochi Bangalore gas pipeline materializing and securing gas allotment. In the EAF for making stainless steel slabs, up to 30% DRI can be fed, the principal feedstock being scrap. Salem gets its scrap mainly from SAIL plants on inter unit transfer price basis. It generates revert scrap. Plus some imports are there.
Here it will be in order to go back in history. Was it not that Salem was chosen as the site for making steel for its proximity to Kanjamalai hills where an estimated 75 million tonne iron ore deposit is found? The ore is of magnetite variety with iron content of 35%. No great ore is this. But as China has shown any ore can be made worthy of iron making. In fact, as early as 1830s, Kanjamalai ore was used as feedstock for making pig iron.
The surplus land with SSP is so much more precious because of the developed infrastructure in the area. A DRI unit may stay in the imagination of SSP managers, but a question mark remains as to when mining will be allowed at Kanjamalai hills and which parties will win mining rights.
According to SSP executive director Mr Pankaj Goutam, the Indian economy becoming increasingly sophisticated will lead to more and more use of stainless steel in the making of railway wagons and coaches, in building and construction, automobiles and engineering and process industries. At this point, however, close to 75% of our stainless steel goes into the making of kitchenware. As the use pattern will inevitably change, the Indian per capita consumption now at 1.5 kilogram can only move closer to the world average of 4 kilogram.
(Sourced from www.business-standard.com)
