Two European firms among seven in race to set up Kadapa steel plant

Joint venture likely to be finalised by the end of this year

The A.P. High Grade Steels Limited, the special purpose vehicle (SPV) formed by the State government for setting up a 3 MTPA integrated steel plant in Kadapa district is likely to finalise the joint venture (JV) structure by this year-end.

It is right now in talks with seven companies, including two European steel giants, which have expressed interest in becoming partners in the project that has been envisaged in the 13th Schedule of the A.P. State Reorganisation Act, 2014.

In an exclusive interview on Friday, S. Shan Mohan, Managing Director of the A.P. High Grade Steels Limited, told The Hindu that the modalities of public procurement were being finalised, while on the civil works front, RITES was engaged for laying a 9-km railway line from Muddanur station, and Gandikota reservoir was identified as the water source.

Iron ore supply

“As far as the mines are concerned, an MoU has been signed with the National Mineral Development Corporation (NMDC) for supplying the iron ore,” Mr. Mohan said, while pointing out that the government does not intend to provide captive mines for the plant.

“Over a period of time, the government intends to sell out its stake to the private partners as setting up and operating steel plants is not its business. The government may initially have some equity participation,” Mr. Mohan said.

It is estimated that a million tonnes of steel manufacturing capacity requires ₹5,000 to ₹6,000 crore investment.

While the JV is likely to acquire a final shape soon, commencement of manufacturing is bound to take more time than expected due to the heavy investment involved and the impact of COVID-19 on global markets, especially the steel and automobile sectors.

The government has already given 3,100 acres of land for the project for the steel plant area and township put together.

The construction of a compound wall has begun and tenders have been invited by the government for widening an arterial road that leads to the plant. Besides, jungle clearance and soil testing works are under way.

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