Aaress Iron and Steel (AISL), part of iron ore mining major Baldota Group, is setting up a new steel plant in Koppal, Karnataka, with an initial investment of US$1.2bn mainly to supply India’s auto industry.
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Total capacity is expected at about 5m tonnes and the first phase – capacity of 1.2m tonnes – is scheduled for completion by mid 2010.
Another $2.2bn will be spent on the second phase with two-thirds of the investment raised through bank loans, according to AISL executive director Shrenikkumar Baldota.
“Even though the interest rates are high, we hope our pricing will be extremely competitive in the market,” he said.
“Over 60% of the [initial] 1.2m metric tonne capacity will be for the automobile sector. We will manufacture automotive grade alloys, billets and wire rods in the first phase, the balance will be used for making flat products,” said general manager public relations KRM Reddy.
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By GlobalDataThe Indian domestic market for auto grade steel products is worth around $3bn a year while current total production is around 2m tonnes. Imports for the auto industry alone are around 200,000 tonnes.
Auto grade steel in the domestic market fetches between $1,500 to $2,000 per tonne and “we will target even those who import steel to expand our market,” Reddy added.
The company will hire over 3,500 workers for the project on 2,000 acres and also install two wind turbines generating 35 mW of electric power for the site.
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