Posco’s plan to make steel in India through its patented technology, the Finex process, might not have been realised with its mega steel plant proposed in Odisha still in limbo, but the state would soon see use of this modern technology as the South Korean firm has decided to relocate one of its pilot Finex plants to the Kalinganagar premises of Mesco Steel.
If things go as per the plan, the first batch of finished steel made through the Finex process at the Mesco plant will roll out in the first quarter of 2017.
To cement the deal on transfer of technology and equipment for the purpose, Posco and Mesco Steel today signed a memorandum of agreement (MOA).
“The dismantling of Posco’s Finex technology plant from Pohang (South Korea) and setting it up in our premises would take more than a year. In the meantime, we will install additional facilities such as steel melting shop (SMS) and rolling mill for producing long steel at 2 million tonne a year. The commissioning of the relocated Finex plant would be around first quarter of 2017,” said J K Singh, chairman of Mesco Group.
The companies will sign a definitive agreement in the upcoming quarter and the pre-engineering work to dismantle the Finex steel plant having 0.6 million tonne per annum (mtpa) capacity will start in the same period. Posco will retain a minority stake up to 26 per cent in the project, according to a statement issued by Mesco.
Finex technology, developed exclusively by Posco, is the process to smelt iron ore without using expensive coking coal. As the process uses normal coal abundantly found in Odisha, it will reduce the cost of production for hot metal. Steel makers in India are currently importing coke to meet their fuel requirement. Posco has three such Finex units in Korea and the one identified for relocation has been working for more than 10 years.
“The Finex process will enable us to produce hot metal at a cost which will be less by Rs 2,000-2,500 per tonne compared to other steel makers,” added Singh.
Mesco Steel currently has two blast furnaces at Kalinganagar, and produces only pig iron. The company is arranging funds to install other equipment for production of finished long steel.
The company has an operating iron ore mine at Barbil with production capacity of 3 million a year and is in the process to enhance the ore output to 6 mtpa.
Besides, it has been allocated a captive mine at Malangtoli in the state, which is yet to start operation.
Mesco had been in search of fresh capital for expanding its 1.2 million tonne pig iron plant at Kalinganagar to 3.5 million tonne a year integrated steel making facility.
However, in the first phase it is seeking funds for production of two mtpa long steel as part of its $700 million expansion plan.
Earlier Mesco, which has no coke making facility, was in talks with Jindal Stainless Steel (JSL) to produce steel jointly by using the coke produced by the latter. But JSL did not accept the offer of Mesco.