Andhra Pradesh Signs Deal With NMDC For Supply Of Iron Ore To Kadapa Steel Plant
BHEL was in 2011 awarded a contract to set up a raw material handling system at NMDC’s under-construction Nagarnar steel plant in Chhattisgarh. (Photographer: Nelson Ching/Bloomberg)

Andhra Pradesh Signs Deal With NMDC For Supply Of Iron Ore To Kadapa Steel Plant

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The Andhra Pradesh government on Wednesday signed a memorandum of understanding with the NMDC Ltd. for the supply of iron ore to the proposed integrated steel plant in Kadapa district.

Chief Minister YS Jagan Mohan Reddy is scheduled to lay the foundation stone for the steel plant, at Sunnapurallapalli and Peddanandluru villages of Jammalamadugu Mandal on Dec. 23. An extent of 3,295 acres of land has to be acquired in the Jammalamadugu area of Kadapa district for the proposed plant.

According to the Chief Minister, the proposed plant would be completed within three years and provide employment to about 20,000 persons. NMDC Director (Commercial) Alok Kumar Mehta and AP High-Grade Steel Limited CMD P Madhusudan signed the MoU in the presence of the Chief Minister, who termed it historic.

The integrated steel plant will have a production capacity of three million tonnes per annum. It, thus, requires at least 4.5 million tonnes of iron ore every year. If not from neighbouring Karnataka, NMDC is expected to supply the ore from its mines in Chhattisgarh though the cost would be higher, official sources said.

The proposal for setting up of the integrated steel plant was included in the AP Reorganisation Act, 2014. The Government of India constituted a Task Force, chaired by Joint Secretary, Ministry of Steel, to relook into the feasibility aspects of the project.

During the task force meetings, MECON Limited presented its draft feasibility report based on which the preliminary internal rate of return for the Blast Furnace- Basic Oxygen Furnace route was estimated to be 18.95 percent.

"This is extremely encouraging," Industries and Infrastructure Principal Secretary Rajat Bhargava noted. The plant is supposed to be set up with private investment. "If the need arises, the state government itself will establish the steel plant. An initial provision of Rs 250 crore has been made in the 2019-20 budget for the establishment of the steel plant," Rajat Bhargava said.

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