Steel major JSW is looking to cash in on the high grade steel market for the automobile sector with their launching of the 2.3 mtpa (million tonnes per annum) Cold Roll Mill-2 (high grade steel) in their Bellary plant.
The new plant coming after the company signed an agreement with Japanese major JFE for transfer of technology as well as technical assistance in setting up the new units in their existing Sadur plant on the outskirts of Bellary. JFE has a 15% stake in JSW Steel.
Despite the slump in the domestic auto sector, JSW seem confident about the demand for 980 MPA (Mega Pascal) high grade steel. “Out of the 72 mt of steel produced last year, 4.5 mt was the requirement of the automobile sector. Out of this 20% (high grade steel) is imported,” GS Rathore, Executive Vice-President of the steel major said here. JSW became the first steel maker in the country to launch this technology where both galvanised and galvannealed categories will be produced.
It is looking to provide foreign exchange respite to car makers here which (in JSW’s opinion) will bring down the cost of the car for the consumers itself. According to the company, car makers like Toyota, Nissan, Maruti and Honda among others have shown interest in taking the technology forward. JSW will first start with supply to the tube industry, engineering and other products like white goods that do not have any approval period.
CRM-2 can be used for outer panels in cars where more strength is required while CRM-1 (480MP) is used for internal parts of the automobile. Vinod Nowal, Deputy Managing Director of the company said that car manufacturers can save upto 10-15%. This would help bring down prices for the consumer who has been delaying purchase due to high initial cost as well as high ownership costs. JSW spent $700 million (`4,500 crore) for the new CRM-2 plant. Nowal said that they plan to reach 2.3 mtpa within the next one year. Their CRM-1 plant has a capacity of 1.2 mtpa and is currently running under full capacity.
On their requirement of iron ore, Nowal said that they required close to 20 mpta of ore but there was production of only around 18-19 mtpa in the state. He said that the company’s plan to invest `16,000 crore to add another 6 mtpa is on hold as they are unable to get captive mines. It is paying a premium for ore produced in Karnataka as the base price is over `3,800 per tonne when compared to `1,800 in Odisha, Chattisgarh and Jharkand which also produce high grade 63.5% ore. It gets at least 25% of their ore from Odisha and Jharkhand, Nowal said.