Will Odisha’s Second Steel Plant Dream Come True?

OdishaPlus Bureau

Will the second steel plant dream in Odisha ever become a reality? This is the question uppermost in everybody’s mind, particularly after Dharmendra Pradhan took over as union steel minister.

According to reports, the Steel Authority of India Limited (SAIL) is paying more attention to set up a coast- based steel plant with an approximated cost of over Rs 15,000 crore. The intention  is  to increase  steel production from 16.3 million tonnes to 50 million tones.

“Overall, we plan to raise our capacity to 50 million tonnes by 2030-31 in two phases. The first phase, which will be till 2025-26, will take our capacity to 35 MT,” said SAIL chairman Anil Chaudhury.

Positive Response

Chaudhury said SAIL has received a positive response from Odisha Chief Secretary and will send a team to explore a plot near the coast. SAIL has in fact been planning a coast-based steel plant for quite some time.The Odisha project, if fructifies, would be SAIL’s second steel plant in the eastern state. The production could initially be for 3 million tonnes, which could go up to 6 million tonnes .

SAIL currently runs the Rourkela Steel Plant (RSP), which was set up in the 1960s with German technical collaboration. Recently the RSP was modernized and has expanded itself to a capacity of producing 0.5 MT of hot-rolled metal annually.

While all big steel firms like JSW, Tata and RINL have coast-based plant, SAIL doesn’t have any. None of SAIL’s five integrated steel plants are located near the coast. Hence, its cost of transportation is higher than its peer. A coast-based steel plant is the answer to reduce costs.

SAIL would need around 2,000-2,500 acres of land to set up the steel plant. As per industry estimates, a three-mtpa steel plant would entail around Rs 20,000 crore investment.

History

In the eighties when the Congress party was in power, both in the State and at the Centre, there was a buzz about setting up a second steel plant by SAIL in Odisha which however never materialized. After Janata Dal came to power in 1990, the then Chief Minister Biju Patnaik made an effort to set up a steel plant near Paradip. Subsequently, the Naveen Patnaik Government signed a MoU with Korean steel giant Posco to establish a steel plant in Jagatsinghpur district. It too could not materialize for reasons not unknown.

The problem is the State Government has already decided to allocate 900 acres of POSCO’s Paradip land to the JSW Steel.

Samajwadi Party

With SAIL contemplating to set up a second steel plant in the coastal region, president of Samajwadi Party’s state committee Rabindra Nath Behera has requested the new Steel Minister to set up the proposed plant at Paradip.Stating that the dream of having a second steel plant in the State by the national steel major could not be realized despite efforts made by successive governments in the state and the Centre, Behera, in his letter to Dharmendra, has said, “Now time has come, when you are the Minister of Steel, to realize the dream by establishing the second steel plant at Paradip by SAIL,”A second steel plant by the Central PSU will generate employment for thousands of unemployed youths – particularly in the districts of Keonjhar, Jajpur, Kendrapara and Jagatsinghpur Behera has said in his letter.

JSW vs. SAIL

If SAIL finally goes for the second steel plant and if that happens in Paradip, the land the Odisha government had earmarked for South Korean steel major Posco could be transferred. The government had acquired around 2,700 acres of land in and around Paradip. Out of the acquired land, it had handed over 1,700 acres land to Posco.

But the problem is the State Government has already decided to allocate 900 acres of POSCO’s Paradip land to the JSW Steel. The JSW Steel had proposed to the State Government to set up a mega steel plant of 10-MTPA capacity at an investment of Rs 50,000 crore which got approval from the Naveen governmnt. JSW’s steel plant is expected to go on stream in four years and generate around 30,000 jobs. The JSW is also planning to have a long-term agreement with the State-owned Odisha Mining Corporation (OMC) for iron ore supply for its shore-based integrated steel project.

Since the High-Level Clearance Authority (HLCA) headed by Chief Minister Naveen Patnaik has permitted JSW’s Paradip project and the company is already in the process of starting work, SAIL’s chance of a port-based plant in Odisha seems remote.