The Soviet-era plant had not been upgraded in nearly four decades, with zero maintenance for five years at the point of Mittal takeover
When Lakshmi Mittal bought a bleeding steel complex in Kazakhstan in 1995 by paying $250 million and assuming some debts, the world thought the steel mogul was finally to meet his Waterloo in the windswept steppes of Temirtau city, notorious for drug abuse. Mittal, by then, had established credentials as an ace in turning around sick mills across the continents. The Soviet-era plant had not been upgraded in nearly four decades, with zero maintenance for five years at the point of Mittal takeover.
Armed with a $450-million credit line from European Bank for Reconstruction & Development and group cash of $350 million, Mittal set on a task of comprehensive reconstruction of integrated Kazakh mill. Its business was aligned with Ispat International, since rechristened ArcelorMittal. He proved doomsayers wrong by turning the mill profitable in late 1999.
Recalling the revival of the plant from a point of disintegration has become relevant in the context of Steel Authority of India (SAIL) building a new mill at Burnpur with crude annual capacity of 2.5 million tonnes (mt), at a site witness to the chequered history of Indian Iron & Steel Company (IISCO) from a highly profitable producer to near-collapse in the early 1970s, leading to its management takeover by the government in 1972 and finally to its merger with SAIL.
A socialism-obsessed political establishment with no love lost for obsessively independent promoter Biren Mookerjee, inability of the management to rustle up funds for modernisation, and time and energy wasted to fend off corporate raiders were the undoing of IISCO, whose shares were for long regarded the most rewarding investment. The question now to be asked of SAIL chairman Chandra Shekhar Verma is whether the investment of Rs 16,408 crore in the new plant marks the beginning of IISCO regaining its old glory. "I'm very happy for SAIL and the Durgapur-Asansol industrial belt that IISCO, which came to stand as relics of very old technology such as twin hearth steel making, has now joined the ranks of most modern steel plants.
A blast furnace with useful volume of 4,160 cubic metres, migration from the ingot route to continuous casting and finally packing 2.50 mt capacity in less than 1,000 acres are outstanding features of IISCO in its new avatar," says Vishambhar Saran, chairman, Visa Steel. Verma claims the IISCO plant using 381 acres a mt sets a new benchmark for 'land use efficiency for the Indian steel industry'.
SAIL, however, is not spared the criticism for time and cost overrun that the project suffered. Time slippages had much to do with the unforeseen challenge of removing 2.5 mt of slag boulders, including 150,000 tonnes of slag mixed with iron and steel. What also delayed work was the long time taken to acquire a small patch of land where a deity named Jhorabudi in the form of two intertwined trees stood.
Ingress of raw materials and egress of coke, sinter and steel products were not possible till that land could be acquired. Cost overshooting the budget is inescapable if a project suffers long delays as happened with IISCO. Whatever the West Bengal government's equation with New Delhi is, public sector undertaking SAIL continues to remain by far the largest investor in the state. To go by Verma's announcement, SAIL will be further investing Rs 25,000 crore to take the Durgapur Steel Plant annual hot metal capacity to nine mt and Rs 17,000 crore to make IISCO a 5.6 mt unit.
The Durgapur-Asansol steel belt, which lost much of its original lustre due to economic, political and trade union militancy reasons, is now emerging as a steel hub. Saran says, "This is as it should be. Its iron ore resources are so large that SAIL will remain self-reliant in this steel-making ingredient as it pursues capacity expansion to 50 mt by 2025. The point to be underlined is every steel unit should be making optimum use of land, which is not easy to get any longer."
Production and despatch of steel require handling of raw materials and finished products in very large volumes. In this regard, IISCO is ideally located. Burnpur is on the network of both South Eastern and Eastern Railways, as it is connected to the Kolkata-Delhi National Highway. Only someone in senile decay will complain about the product profile of the new IISCO plant. All steel products, long and flat, continue to fare poorly here and abroad, leaving hardly any producer margin. Unfortunately for SAIL, the new IISCO mill starts production in an unfavourable market.