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Mr Sajjan Jindal (left), Vice-Chairman & Managing Director, JSW Steel Ltd, and Mr Karl Gruber, Executive Vice-President and Member of the Board, Siemens VAI, at a press conference in Mumbai on Thursday. - Shashi Ashiwal

Mumbai , Nov. 10

JSW Steel Ltd signed a contract with Siemens VAI on Thursday for setting up a 2.8 million tonnes per annum (MTPA) blast furnace, which would be the country's largest, at its Vijaynagar works.

The company is currently expanding its capacity from 2.5 MTPA to 3.8 MTPA at a cost of Rs 5,000 crore, of which 20 per cent would be the cost of the 4019 cubic metre-blast furnace. The world's biggest blast furnaces settle in at around 5,000 cubic metres.

According to Mr Sajjan Jindal, Vice-Chairman & Managing Director, JSW Steel, the Vijaynagar facility, which has stated plans for 7 MTPA by 2008, is targeting an eventual capacity of 10 MTPA by 2010. This, coupled with the 10 MTPA that JSW Steel has proposed in Jharkhand, would take the company's total capacity to 20 MTPA by 2012.

The Jharkhand plant would entail an investment of Rs 35,000 crore over eight years. The detailed financing of this project is being worked out. Originally slated at a smaller capacity in West Bengal, the project was shifted to Jharkhand as the latter State's policy said that iron ore could not be taken out of the State.

The proposed second plant may also need a blast furnace of similar size as the one now contracted for Vijaynagar. The large furnace size helps reduce the production cost of hot metal. At existing raw material cost, the blast furnace would cut JSW Steel's cost per tonne of hot metal from $140 per tonne to $120, Mr Jindal said. The estimate was based on coking coal price of $160 per tonne.

"I fully expect that in years to come, the new furnace would surpass its target and touch 3 MTPA," Mr Geof Wingrove, Director (Iron & Steel) Siemens VAI, said.

The Vijaynagar works had come up using Siemens VAI's COREX technology. Asked about the shift to the blast furnace route, officials said that it was based on both the extent by which capacity was being scaled up and the ability to get in coking coal, something particularly relevant for Jharkhand as the State is rich in iron ore and coking coal. Depending on location and resource availability, steel companies pick and choose the two technologies. China's Bao Steel, for example, is preparing to put up a large COREX-based plant, as the growth in Chinese steel making has strained access to coking coal.

Mr Jindal said that rising incremental expansion at Vijaynagar using the blast furnace route would notmarginalise the COREX plant, as it was viable at existing capacity.

The new, big blast furnace would not also greatly reduce the exportable surplus of power (produced as a by-product of the COREX process) at Vijaynagar. "There may be a minor reduction in surplus, that's all," he said.

Shares of JSW were nearly unchanged at Rs 209.45 on BSE.

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