The Narendra Modiled government has decided to set up four steel plants in Chhattisgarh, Jharkhand, Odisha and Karnataka, the first state-owned greenfield projects that will come up in this sector in almost four decades.

The new plants will add 20-24 million tonnes of steel-producing capacity, steel and mines minister Narendra Singh Tomar said. Central PSUs such as the Steel Authority of IndiaBSE -2.12 % (SAIL), Rashtriya Ispat Nigam (RINL) and NMDC will collaborate with state governments and form special purpose vehicles (SPVs) to set up the projects.

Each plant is likely to have an initial capacity of 2-3 million tonnes, with the option to expand to as much as 6 million tonnes, the minister said. The projects will require an investment of Rs 56,000 crore to begin with, assuming a cost of Rs 6,000 crore to set up 1 million tonne of steelmaking capacity. "I have had discussions on this with the chief ministers of Chhattisgarh and Odisha. While SAIL will lead the SPV in Chhattisgarh, RINL will spearhead it in Odisha. We should be in a position to sign MoUs in a month in these states. I will also take up the plan with the chief ministers of Jharkhand and Karnataka," said Tomar.

The government may invite other partners to join the projects, he added. In each state, two SPVs will be created -one to focus on steel making and the other to focus on mining operations, Tomar told reporters after visiting SAIL's Rourkela steel plant on Sunday, accompanied by SAIL chairman CS Verma.

"India requires steel and any initiative that adds fresh capacity. Whether it is in the private or public sector is good news. However, steel is an unregulated sector and allocating natural resources to PSUs gives them an advantage vis-a-vis private sector players. At the end of the day, we both have to compete in the market," said Seshagiri Rao, joint MD and CFO of JSW Steel.

"In an industry where there are a number of private players, state should withdraw," said Kameswara Rao, energy , utilities and mining leader at PricewaterhouseCoopers. "It should create conditions for investments to come through." Tomar acknowledged that the Indian steel industry is in a crisis and mining has almost stalled following a crackdown on illegal mining. Output of iron ore, a key ingredient in making steel, has been hit by restrictions on mining in major producing states such as Karnataka and Goa.

"Our government has set a target of achieving 300 million tonnes of steel production capacity by 2025, up from 101 million tonnes at present. Together with revolutionary changes in mining through MMDR amendment ordinance, our move to promote new steel plants will add up to 24 million tonnes of production capacity and infuse new life into the mining sector too," the minister said.

                                                                                                                             XINSTEEL  NEWS