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Rediff.com  » Business » Steel majors flock Karnataka with Rs 30,600 cr plans

Steel majors flock Karnataka with Rs 30,600 cr plans

By Aravind Gowda in Bangalore
September 25, 2006 12:10 IST
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The north Karnataka districts of Bellary, Raichur and Koppal have emerged as major centres of high-grade iron ore mining. Consequently, the private sector has finalised a massive Rs 30,600 crore (Rs 306 billion) of investment in the last two years in this region to produce basic steel, alloy steel, billets, pig iron and sponge iron.

Bellary district alone has attracted investments worth Rs 14,083 crore (Rs 140.83 billion), followed by Raichur district (Rs 12,748 crore or Rs 127.48 billion) and Koppal (Rs 3,733 crore or Rs 37.33 billion).

Some of the major players in the steel industry, like Jindal Vijayanagar Steel Ltd (Rs 4,400.67 crore or Rs 44 billion) and JSW Steel Ltd (Rs 1,100 crore or Rs 11 billion) of the Jindal Group, South West Iron Steel Ltd (Rs 3,206 crore or Rs 32.06 billion), Kalyani Steels Ltd (Rs 353 crore or Rs 3.53 billion), Kirloskar Ferrous Industries Ltd (Rs 174 crore or Rs 1.74 billion), Ispat Industries Ltd (Rs 7,144 crore or Rs 71.44 billion), Surana Industries Ltd (Rs 562 crore or Rs 5.62 billion) and BMM Ispat Ltd (233 crore or Rs 2.33 billion), are executing major projects in the region, according to Karnataka Udyog Mitra, the nodal agency for investments in the state.

The Bellary-Raichur-Koppal triangle accounts for 2.5 billion tonne of the state's 3.5 billion tonne of iron ore deposits, but had till lately remained outside the radar of the country's major steelmakers.

"But the situation has now changed. We will initiate a process to woo mega players by providing them captive mining facility," Karnataka's Industry Minister Katta Subrahmanya Naidu said.

In 2005, about 30 million tonne (30.4 per cent of the national produce) of iron ore worth Rs 3,000-3,500 crore (Rs billion) was extracted from the Bellary-Raichur-Koppal triangle, making it one of the key producers of high-grade iron ore (65 per cent ferrous).

The
burgeoning demand for steel in the wake of a boom in the Indian economy has also prompted some of the big mining companies to set up steel mills.

For instance, one of the top iron ore exporters, Mineral Sales Private Ltd, is in the process of setting up an alloy steel plant in Koppal district (Rs 2,200 crore or Rs 22 billion). Similarly, Kariganur Iron and Steel Pvt Ltd, another iron ore exporter, is setting up a sponge iron plant (Rs 25 crore or Rs 250 million) in Bellary district.

Of the 100 sponge iron plants sanctioned in the last three years in the state, 74 are located in these three districts. Many of them have captive mining facility. Similarly, of the 22 steel mills (integrated, alloy steel, special steel) sanctioned in the state, only two are located outside the Bellary triangle.

A majority of the steel plants have also taken up captive power projects to meet their requirements.

The region has also assumed importance for the Kudremukh Iron Ore Company Ltd, which had to close down its mining operations in the Western Ghats following a Supreme Court order. KIOCL, which has a pellet plant in the port city of Mangalore, has applied for a mining lease in the Bellary triangle.

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Aravind Gowda in Bangalore
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