NMDC’s Rs 15,000cr steel plant plan hits hurdle
Sanjay Dutta, TNN | Mar 20, 2012, 04.55AM IST
http://timesofindia.indiatimes.com/business/india-business/NMDCs-Rs-15000cr-steel-plant-plan-hits-hurdle/articleshow/12336396.cms

NEW DELHI: State-run NMDC`s plan to build a Rs 15,000-crore integrated steel plant at Nagarnar in Chhattisgarh has hit a roadblock. Three members of the board have questioned the due-diligence process in asserting performance of the package chosen for the unit`s finishing line.

Board documents and government sources indicate the steel ministry`s representative on the board and two independent directors - a former Eastern Coalfields Ltd chairman and a retired Lt Gen - have questioned whether the finishing line, estimated to cost over Rs 3,100 crore, can achieve its target of making 2.9 million tonne of high-value steel plates, strips and coils a year with the chosen package.

The finishing line turns liquid iron from blast furnace-smelter plant into high-value steel products. If a finishing line fails to achieve full capacity, investments made in iron-making facilities become uneconomical. NMDC qualified a consortium under Italy`s Danieli for the finishing line. Danieli quoted a price of Rs 2,633 crore against the Rs 2,912-crore bid of a consortium under Germany`s SMS Siemag. But the contract stands stalled since February, 2009, tender over two issues. One, the plant is rated at 3 million tonne, but the bidders` qualifying condition is set at 2 million tonne. Two, the performance of the mill Danieli referred as proof of its past achievement.

N K Nanda, NMDC`s director (technical) and acting chairman, declined to comment saying "these are board matters". Danieli vice-president Renato Pezzano skirted specific queries from ToI. "Danieli is fully qualified, most experienced and owns the most advanced technology. It is fully capable to execute NMDC project in the best suited manner. Danieli`s credentials have been ascertained and established for almost 100 years now."

Danieli cited Essar`s two-million tonne Algoma plant in Canada to meet NMDC`s condition that the bidder must have the experience of building at least one mill of such capacity and its operation for three years. Records show and Essar executives admitted the plant is operating at an average of 1.6-1.8 million tonne. Though NMDC board records "shortage of liquid steel" as the reason, it does not give reveal the source of information.