Under the leadership of its current Chairman, Mr S.K. Roongta, the state-owned steelmaker Steel Authority India Ltd (SAIL) has risen from rank 17 in the list of global steel makers to No. 2 (according to World Steel Directory ratings).
The growing importance of SAIL in the world steel market has only been underlined by the fact that global steel majors such as ArcelorMittal, Posco and Nippon Steel are looking to have tie-ups with the company. In the midst of a mega-expansion plan, Mr Roongta took some time out to speak with Business Line about the company's future plans.
What is the progress on SAIL's expansion plans? When are they likely to be completed?
Expansion plans are moving along as per schedule. The process will be completed progressively by 2012-13. Some facilities though would be in place by 2011 itself. Burnpur will be commissioned in June 2011, Bokaro cold-rolling mill will be ready by December 2011, Rourkela, Durgapur and Bhilai also by 2011. The Salem steel plant could be commissioned by June-July 2010. In fact, in Salem, we are almost ready but we are facing some problems with regard to the availability of power from the Tamil Nadu Electricity Board. Although we had got their confirmation that they will meet our enhanced power requirement but due to some power crisis, we are having some difficulties in getting our power requirement. We have already approached the State Government on the issue and hope we get the required support.
Other PSUs such as Nalco and IOC are evincing interest in nuclear power, is SAIL also looking at this segment?
Though we have not given a serious thought to nuclear power, but power is an allied business for us. One should always be alive to business opportunities. We need power in some locations… It is (nuclear power) a business proposition which can be looked at. We are already there in thermal power for captive purposes and we need more power for captive uses, so one of the sources can be nuclear power. The plants need not be at the same location, it can be at a different location we can pass it on the grid and send it to the steel plants. We already have a joint venture with NTPC to manage our captive power plants, so this proposition can be looked at by that joint venture as well.
Have you also faced land acquisition problems in Jharkhand for a new Greenfield project?
Land acquisition is a big issue in States like Orissa and Jharkhand whether it is for us or private players. As far as SAIL is concerned, we have our mines on the eastern side in Jharkhand and Orissa. We have our infrastructure there with our capacity of 13 mtpa. With brownfield expansions at existing sites, we can ramp up capacity to 45 mtpa. So our first priority would be to ramp up capacity in our brownfield projects. For Greenfield plants, Karnataka can be an option for SAIL also.
We have a plant there, we have some extra infrastructure available there also, but right now we are primarily concentrating on brownfield expansion.
What is your outlook on steel prices in the coming months?
Two factors had driven steel prices up in the last three to four months. One was cost push on account of sharp increase in costs of inputs and second, the demand outlook has also improved. These two factors have helped in improved price outlook on the steel front globally. Going forward a lot will depend upon Chinese demand outlook for steel because they are a major factor in global steel output. They are producing and consuming 50 per cent of the world's steel. The next trigger will come with raw material prices for the July-September contracts. Coking coal and iron ore pricing regimes have moved to quarterly pricing. While this quarter's prices have been settled, the prices for the July-September quarter will be discussed from the end of this month till the middle of June. If there is an increase in raw material prices then surely it will reflect in steel prices.
