Union Steel Minister Chaudhary Birender Singh on Friday said a 1.5 million tonne per annum electric arc furnace based plant will come up at Paloncha in Telangana and SAIL and Arcelor Miital will finalise a high strength special steel making unit in Kadapa district of Andhra Pradesh.

Addressing a press conference here today, the Union Minister said, “The Electric Arc Furnace project, which will be based on steel scrap, will come up at the sick Sponge Iron plant where there is 450 acres of land.”

“And the plant at Kadapa, for which SAIL and Arcelor Mittal are likely to finalise the deal, is proposed to make specialised high strength steel for automotive sector. With India poised to become a hub for the global automotive industry, this project will be an important addition for the steel sector,” he said.

While the details of the investments are yet to be finalised, the electric arc furnace project is likely to see an investment of about Rs 9000 crore and the AP project an outlay of Rs 15,000 crore, the Union Minister explained.

Referring to the two integrated steel plants proposed in Telangana and Andhra Pradesh as a part of the bifurcation of AP Reorganisation Act, the Minister said, “A final report on the feasibility of the plants at Bayyaram in Telangana and YSR Kadapa district in AP, is likely to be submitted by Mecon, which has been engaged to do final feasibility study.”

On two earlier occasions, the feasibility studies conducted on behalf of the Steel Ministry were against setting up of steel plants at these locations as the returns on investments would be lower due to lack of raw materials such as iron ore and coal close to the proposed plants.

With both the States keen on the Centre honouring the commitment made in the Parliament, the Minister said: “The latest feasibility report taken up after discussions by a task force is likely to come out within a month. It could decide the fate of these two projects.”

Telangana Industry Minister KT Rama Rao said iron ore and coal required for steel plants are being transported to 450 km to serve the Vizag Steel Plant and there would no hindrance to transport iron ore from NMDC Bailadila mine which is about 155 km from Bayyaram.”

The State also offered to share 30 per cent cost of the iron ore evacuation line to support integrated steel pant. The rail line requires about Rs 2000 crore, Rao said.

The SAIL Arcelor Mittal project has two States--Guajarat and AP wooing them. However, AP may be suitable given the advantages.

“As per the Steel Policy, the focus now is on development of such steel plants under public, private, partnership mode. We expect to see investments from private players in these projects,” the Union Minister said.

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