Essar to set up 2-mt steel plant in Bangladesh
The Ruias-promoted Essar Group has decided to set up a 2 million tonne gas-fired steel plant in Bangladesh, through a collaboration with four local partners.
By TNN |
MUMBAI: The Ruias-promoted Essar Group has decided to set up a 2 million tonne gas-fired steel plant in Bangladesh, through a collaboration with four local partners, according to sources close to the development. The plant, estimated to cost about Rs 8,000 crore, will make hot-rolled steel, a base-grade steel category that can be value-added into higher grade products. The Ruias will invest $550 million for 60% of the equity.
When contacted, an Essar spokesperson told ET: ���We keep evaluating investments in various projects and would not like to comment upon a specific project.��� Interestingly, the Ruias plan for a steel plant in Bangladesh, comes even as the Tatas��� plan for a similar steel project has been delayed due to political hurdles.
Essar Bangladesh is scheduled to come up in the port city of Chittagong and is likely to start commercial production by 2010. Essar has signed a memorandum of understanding with local players like the S Alam Group, PHP, KDS and Abul Khair. However, the final agreement is yet to be signed. The proposed steel plant is expected to get approval from Bangladesh���s investment board as the consortium may not seek tax and other special incentives that other investors had sought earlier, sources said.
An industry source said, ���Essar project may get Bangladesh���s government approval because of the local partners there. They may also not have problems in sourcing gas.���
The Bangladesh government has been considering some proposals from certain business groups to develop a basic iron ore industry that will meet growing demand for steel in the country.
While the debt-equity structure of the project is not known, it is learnt that a good part of the debt would likely be funded by the Islamic Development Bank of Saudi Arabia.
Earlier, S Alam Group, PHP, KDS and Abul Khair used to import billets for their re-rolling steel mills in Bangladesh, from Essar���s pellet plant in Orissa. With a steel plant in Chittagong, there would be no need for imports once Essar Bangladesh starts commercial production.
When contacted, an Essar spokesperson told ET: ���We keep evaluating investments in various projects and would not like to comment upon a specific project.��� Interestingly, the Ruias plan for a steel plant in Bangladesh, comes even as the Tatas��� plan for a similar steel project has been delayed due to political hurdles.
Essar Bangladesh is scheduled to come up in the port city of Chittagong and is likely to start commercial production by 2010. Essar has signed a memorandum of understanding with local players like the S Alam Group, PHP, KDS and Abul Khair. However, the final agreement is yet to be signed. The proposed steel plant is expected to get approval from Bangladesh���s investment board as the consortium may not seek tax and other special incentives that other investors had sought earlier, sources said.
An industry source said, ���Essar project may get Bangladesh���s government approval because of the local partners there. They may also not have problems in sourcing gas.���
The Bangladesh government has been considering some proposals from certain business groups to develop a basic iron ore industry that will meet growing demand for steel in the country.
While the debt-equity structure of the project is not known, it is learnt that a good part of the debt would likely be funded by the Islamic Development Bank of Saudi Arabia.
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Earlier, S Alam Group, PHP, KDS and Abul Khair used to import billets for their re-rolling steel mills in Bangladesh, from Essar���s pellet plant in Orissa. With a steel plant in Chittagong, there would be no need for imports once Essar Bangladesh starts commercial production.
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