Xindia Steel to set up iron ore pellet plant in Karnataka

February 28, 2008: Xindia Steel Ltd announced on February 27 that they will invest over Rs 8,000 crore in two phases to install iron pellatisation and steel plant in India. Xindia Steel Ltd is a new joint venture between two Chinese steel and minerals companies and two Indian groups.

Chinese National Metals Products, promoted by Xingxing Group of companies with Kelachandra Group and Sigma Minmet Ltd, will install a plant in Koppal in north Karnataka, which will produce 2 million tons of iron ore pellets. The Chinese investors will have 55 percent of the stake in the venture.

Xindia intends to expand the pelletisation capacity to 6 million tons and install a steel plant with 5 million tons capacity in the second phase.

Director, Xindia Steel, Gopi Ramanathan, mentioned that the company had acquired Hampi Steels Ltd to begin its project work. Hampi Steels got the approval from the Karnataka Government to produce steel. However, the company has not initiated any work for over three years. Xindia acquired the company at an undisclosed amount with its land asset of 300 acres.

According to Ramanathan, the first phase of the production will begin in 13 months with initial investment of Rs 400 crore. Pellets will be sourced to Indian steel producers, he added. After stabilising its initial venture, Xindia intends to invest Rs 8,335 crore in the second phase.

The second phase, according to him, will be taken up after acquiring land to produce 6 million tons per annum of pellets. As the land from the government is yet to be allotted, the company has not decided whether the project would be located in the same area.

As per Ramanathan's statement, given the huge demand-supply gap in steel in the country, Xindia will focus on the domestic market first. "This investment is in line with our strategy to be an active contributor to the merging Indian steel industry. The Indian infrastructure has seen acceleration in growth in recent years," said chairman of the $11-billion Xinxing Group, Liu Mingzhong.

Xindia hopes to grow faster to emerge a key player in the steel sector, with low cost Chinese technology and Indian expertise, he said.

Source: Business Line