Published On:July 18 2008
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Tisco to assess cost overruns in greenfield projects

Kolkata: Tata Steel, the world's sixth largest steelmaker, is in the process of assessing the cost overruns in its greenfield projects entailing 23 million tons capacity.

H M Nerurkar, chief operating officer (COO), Tata Steel said, 'We are in the middle of assessing the cost overrun' on the sidelines of Tata Metaliks' annual general meeting.

Among the three projects in Jharkhand, Chhattisgarh and Kaliganagar (Orissa), the latter is expected to be the first off the ground.

Nerurkar said, 'Even though we have ordered the equipments for Kalinganagar, there will cost overrun on the civil and construction work.'

Earlier, the company had estimated an investment of around Rs 90,000 crore for the three projects. However, the construction for the six million ton Kalinganagar project was expected to start next month. Mine allocation for the project was also awaited.

Nerurkar said, negotiations with the families who were yet to move from the project site were underway. The project was a year behind schedule.

In Chhattisgarh, where Tata Steel plans to set up a five million ton plant, the company has got iron ore mine allocation but the land had not been acquired.

According to the original plan, the first phase of the Chhattisgarh project was to be commissioned by 2011 and the second phase by 2015.

In Jharkhand, there was no progress as the state government was yet to come out with a rehabilitation and resettlement (R&R) policy. Applications for land had been made more than a year and a half back but there could be no progress as the R&R policy which had been drafted by the previous government had not been notified. Nerurkar said international steel prices are expected to stay at the same levels for the rest of the year.

He said, international steel prices had increased by around $200 per ton after their first and second quarters and the raw material contracts had been sealed.

'After this prices should be stable for the rest of the year.'

The increase in coking coal prices were to the tune of 200 per cent while that of iron ore was 65-96.5 per cent.

In India prices had not been increased to the level of international prices, as the steelmakers had committed to help the government fight inflation. The moratorium would end this month.

Prices had increased by around Rs 5,000 per ton since January, well below the increase in the international markets.

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