JSW eyes partner for K’taka plant

MUMBAI: Sajjan Jindal-led JSW Steel plans to rope in local mining companies as a partner in its 20-million-tonne per annum beneficiation plant at the company’s Bellary, Karnataka-based facility.

The beneficiation plant, which will process low-grade iron ore that can be later used in steel making, is slated to be commissioned in 2010. JSW’s 10 million tonne per annum (mtpa) capacity expansion will also go onstream around that time. At present, the company makes 3.8 million tonne of steel every year. “The overall investment for the beneficiation project is about Rs 1,000 crore,” said Sajjan Jindal, vice-chairman and managing director, JSW Steel, at a conference on Tuesday.

Mr Jindal was announcing the company’s “best-ever quarterly results,” with net profit shooting up by 151% to Rs 427 crore for the period ended June 30,2007. Net sales increased 37% to Rs 2,191 crore. JSW Steel’s stock was up 0.5% at Rs 736.6 on the BSE on Tuesday.

He also announced the appointment of Siva Sagar Rao as joint managing director and CEO of JSW Steel. Mr Rao, a former head of Vizag Steel, will be based in Bellary and will takeover from BN Singh, who put in his papers earlier this year.

JSW Steel already operates a 3-mtpa beneficiation plant. The rest of the 17-million-tonne will need an investment of Rs 800 crore. “Low-grade iron ore is cheaper. And it is abundantly found in Karnataka. The new plant will reduce our production costs. We are looking at companies which have access to the iron ore,” added Seshagiri Rao, director, finance.

He didn’t rule out the possibility of the partnering company sharing project costs. Mr Rao
refused to name the probable companies. JSW Steel, at present, sources iron ore from state-owned Mysore Minerals.

JSW Steel operates a 3.8-mtpa-capacity plant at the Bellary site with a production cost of $294 per tonne.

Tata Steel, often cited as the most efficient producer of steel, has a production cost of about $180 per tonne. But Tata Steel, point industry observers, is helped by its captive iron ore mines, something missing for other steel companies like JSW Steel, Essar Steel and Ispat Industries. The beneficiation plant is expected to bring down costs at JSW Steel.