JSPL to commission India's largest blast furnace taking capacity to 6mtpa at Angul

BHUBANESWAR: Jindal Steel and Power ( JSPL) is ready to commission India’s largest blast furnace taking its capacity at Angul to 6 million tonnes of steel annually, past everyone else in Odisha.

Chairman Naveen Jindal has been spending almost fifteen days a month, supervising the commissioning at the Odisha 30,000 crore greenfield plant, its largest investment which has fought many battles in its journey to this critical juncture.

"It is a matter of great pride for us to add to the steel making capacity of our nation. We have used the best of technologies, working with Siemens, Mitsubishi, SMS, to complete the largest blast furnace ,at the lowest cost and shortest possible time, in just 27 months," Jindal told ET.

It is a bitter -sweet achievement given that it has was built not with external project financing, but from JSPL’s from internal funds squeezed from funds raised through divestments and a reduction in working capital by Rs 3300cr during the last two years.
Production through the 4554 cubic meter blast furnace will be at a rate of 2.5mt annual capacity for the first three months, and ramped up gradually after that. When it finally touches 4mtpa, by April 2018, JSPL will be the fourth largest steel player in the country with a total steel production capacity of 9mtpa in India and another 2mtpa at its Oman unit.

An understandably upbeat Jindal, has invited Chief Minister Naveen Patnaik for the formal commissioning on Saturday. The Angul plant would in fact become Odisha’s largest, beating Tata Steel’s 3mtpa in Kalinganagar steel plant.

It’s a “game changer” for the company saddled with a debt of Rs 45,490cr. It expects steel production from Angul and Raigarh combined to almost double, from 3.7mt last year, to 6mt in 2017-18. “Consequently, if all goes well, group level EBIDTA could improve from Rs 4800cr in 2016-17 to Rs 8000 cr on a consolidated basis at the end of 2017-18, and even leave JSPL with cash to pay off debt,” says Ravi Uppal, CEO, JSPL.

Immediately after the commissioning of the blast furnace, JSPL plans to shut down the coal gasifier and DRI plant for maintenance. The plant which the company had bravely chosen to build in the first phase through the coal gasification route, was faced with a serious challenge when coal locks were deallocated.

The judicious combination of DRI and blast furnace limits JSPL’s exposure to imported coking coal. However, today the Angul plant has neither captive thermal coal nor captive iron ore. JSPL participated in the latest auction of an iron ore mines but opted out after the initial rounds “We don’t see the point in bidding at unsustainable rates,” said Jindal. He declined to comment on the iron ore and coal cases JSPL is fighting on grounds that they were subjudice, but added he had full faith in the judiciary.

“The raw material challenged has eased considerably, with the significant decline in prices of both commodities. Iron ore supply from 114mt a year ago has risen to 200mt in Odisha, and thermal coal availability is also not an issue and the government has also started linkages,” says an analyst of a leading brokerage firm who asked not to be identified.

The steel ministry has been very supportive of the domestic steel industry, as is also evident in the new steel policy, said Jindal. "We expect a healthy growth in demand of about 5-6% in 2016-17 and welcome the decision of building our country's infrastructure with our own steel," he added.