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Neelachal Ispat Nigam Ltd is expected to operate at 1 million tonne per annum (mtpa) capacity in FY24.
In subsequent years – FY25 and FY26 – Tata Steel would look at completing expansion of phase-II of Kalinganagar unit to 5 mtpa and setting up of 0.75 million tonne electric arc furnace mill in Ludhiana.
Neelachal Ispat Nigam Ltd (NINL) – which Tata Steel had acquired in 2022 at around ₹12,000 crore – began steel-making operations from November onwards. The Tata Tiscon rebars are being made from NINL billets.
Capex boost
Acccording to TV Narendran, Chief Executive Officer and Managing Director, Tata Steel, the company continues to invest in growth in Kalinganagar and in NINL. The capital expenditure was ₹3,632 crore in Q3FY23; while for nine months it was ₹9,746 crore. Another ₹3,000 crore will be spent in Q4FY23 (January-March) to “accelerate the completion of the Tata Steel Kalinganagar expansion project”.
“So in terms of volumes next year, you will see Neelachal at full 1 million (tonne). We’ve not seen much of Neelachal this year because we started the plant within three months of acquiring it. But pretty much, the steel-making started in November,” he said during the earnings call.
Narendran added that incremental volume will surely come for next year. “We will also get some incremental volume out of the Kalinganagar. We have a new caster coming in, that should be up. And Kalinganagar today is actually producing at over 300,000 tonnes a month, which is like 3.6 million rate (per annum). So we’ll get some additional volumes from the caster,” he said.
On a consolidated basis, the Neelachal business was incurring costs, but not yet earning much revenue. “That will get settled during this quarter because the production is coming up to peak and we’ll be selling,” Narendran said.”
NINL expansion plans
According to him, NINL’s acquisition cost also included iron-ore linkages and the land parcel availability.
“What we paid extra was for the iron ore, which has come at a premium and we paid for the land, which is 2,500 acres of land,” Narendran said adding that in order to monetize that, the company needs to expand Neelachal’s capacity “to about 4 million tonne to 5 million tonne, at least”.
Expansion plan will be taken up once capacity ramp up 1 million tonne has happened at NINL.
“We were waiting for this 1 million tonne operating rate to be reached before we go and ask for more capital to expand Neelachal,” he said.
Iron Ore Sourcing
According to him, Tata Steel’s “desire is not to buy any iron ore” and it has “not been buying” any either. And from the second quarter of next FY it is likely to stop buying pellets too.
“We’ve been buying pellets.... but with the pellet plant coming up in Kalinganagar and over the next few years, we’ll build another pellet plant in the Angul facility. We will be self-sufficient in pellets,” Narendran said.
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