Tisco to expand Orissa ferro alloys unit, add power unit Project cost could go up to Rs 100 crore

Tisco to expand Orissa ferro alloys unit, add power unit Project cost could go up to Rs 100 crore

Business Standard, Kolkata

12th April 2006

The ferro alloys & minerals division (FA&MD), a profit centre of Tata Steel, is in the process of doubling capacity of its ferro chrome plant at Bamnipal in Orissa and adding a captive power plant.

The investment in capacity expansion would be to the tune of Rs 100 crore and the captive plant could cost Rs 200-250 crore.

P Roy, executive in-charge, FA&MD said, the company had already started contracting, ordering for the project and was expected to be completed over the next 18 months.

The capacity of FA&MD own plants was to the tune 50,000 tonne, which was being increased to 110,000 tonne.

Apart from the plant at Bamnipal, FA&MD has a plant at Joda, as well.

Roy said, the investment in such projects varied widely but Tata Steel was putting up facilities complete with ancillaries and hence was estimated to cost Rs 100 crore.

Roy said, the F&MD handles around 120,000-130,000 tonne ferro chrome out of which around 50 per cent was conversion.

He said that the market for ferro chrome was currently buoyant but would be shortlived.

"A number of furnaces have been taken down in South Africa so there is a demand-supply mismatch now but supply may catch up in August-September. So, the buoyancy is expected to last only one quarter" explained Roy.

Prices of long-term contracts internationally went up on April 1 by around 7.25 cents per pound.

The power plant would have a capacity of 60 MW, which would result in huge cost savings.

Electricity accounted for 45-50 per cent of the cost and was still going up.

The cost per unit would be Rs 1.90 as against the buying rate of Rs 2.45 now.
However, Tata Steel would have to fork out much less for electricity in South Africa, where the company was setting up a ferro chrome plant.

Roy said, the cost there would be 80-90 paisa per unit.

Ground breaking for the project would be in May.

Although chrome and manganese form the mainstay of FA&MD's business, it also deals with iron ore, dolomite, coal, coke, other ferro alloys and minerals through various national and international business partners in order to provide a comprehensive package to customers.

The business turnover of FA&MD was around Rs 1,500 crore in 2004-2005.