Mumbai - Southern Iron and Steel Company (Siscol), a JSW Group company, is planning to more than double the production of specialty steel to 3 million tonnes per annum (mtpa) over the next three to four years.
The company has already kicked off a Rs 1,500 crore capacity augmentation plan at its Salem, Tamil Nadu, plant to increase the capacity to 1 million tonnes from 0.3 mtpa. This will be completed by March 2008.
J K Tandon, director - projects, JSW Steel, said, “We are expanding capacity at our plant to 3 mtpa in the next three to four years. There is a surge in demand for specialty steels such as alloy steel from the auto sector. We are looking to tap the local demand and sell the final product at Rs 32,000-34,000 per tonne compared with 28,000-30,000 per tonne now.”
JSW plans to spend Rs 3,000 crore on capital expenditure to take production to 3 mtpa by 2011. After the expansion, the plant in Salem will be the largest alloy steel plant in India. The company plans to raise funds through banks and financial institutions among other avenues.
To fulfil the demand for raw materials such as iron ore to produce steel, the company has applied for two magnetite mines in Salem. Both mines have reserves of about 150 million tonnes. Magnetite contains 42 per cent iron ore.
The company will invest Rs 700-800 crore through internal accruals in these two mines, which would begin operations in the next two years after getting necessary government approvals. Around 6 million tonnes of iron ore is needed to produce one million tonne of steel.
The company is hopeful of selling its entire production of alloy steel in the country itself as global auto majors are planning new projects and existing players are into expansion.
The demand from the market for alloys is expected to be 2-3 mtpa over the next few years. Siscol had recently amalgamated with Mumbai-based JSW Steel, with a share swap ratio of 22:1.