Mining

Ferro alloy

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Steel
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Sandur

Power Plant

 

Star Metallics and Power Company Private Limited (SMPPL) is promoted by Euro Industrial Enterprises Pvt. Ltd (EIEL) and ETA Star Holding Pvt Ltd. of Dubai. EIEL has already acquired the 15MVA furnace along with 95 acres of land and building located at Vyasankere (near Hospet, Bellary District, Karnataka) from SMIORE. Since effort to restart the furnace using power resources other than state grid power (which is economically unviable for the production of ferroalloy in the long run) were unsuccessful, it has decided to install a 32 MW Thermal Power Plant to augment the power supply at Vyasankere. However, to take the advantage of present booming market, EIEL has started the 15 MVA furnace with power from public Utility (GESCOM) grid from January 2008.

Sandur

ETA Star Holding Pvt. Ltd. is a multibillion dollar company in various fields including trading, shipping and manufacture of cement. Its turnover during 2006 was about US Dollar 2 billion. It has purchased two 20 MVA furnace from M/s Sandur Manganese & Iron Ores Limited (SMIORE). Further, ETA has recently taken over M/s Bahrain Ferroalloys Ltd (BAFA), Manama, Bahrain, where one 16.5 MVA furnace has been installed but is yet to be commissioned. There is also enough space and other infrastructural facilities available to install another furnace from India at Bahrain.

EIEL & ETA have now come together with the purpose of operating the 15 MVA and one of the two 20 MVA furnaces at its present location by jointly setting up the 32MW Thermal Power Plant. For this purpose, the two have incorporated a joint venture under the name of Star Metallic & Power Private Limited (SMPPL). EIEL is holding majority shareholding in SMPPL and therefore, SMPPL is considered to be a subsidiary of EIEL. Further, to associated expert in the Company Law, Furnace and International Steel and Ferroalloy business, SMPPL has decided to offer Directorship to three professionals who have proven track record in their field of operation.

It is also proposed that Sandur Manganese & Iron Ores Ltd (SMIORE) be inducted as a third major shareholder in the venture, which will be strategic alliance with a view to ensure stable long term supply of manganese ore for ferroalloy production, of which SMIORE holds a large reserve and whose mines are just about 40 km from the plant. Thus, with captive power plant and captive Mn ore mines, SMPPL’s ferroalloy plant will have definite advantage over other producers on a long term basis.

 

LOCATION OF PLANT

Sandur

The ferroalloy complex is situated at Vyasankere, 12 km from Hospet on the National Highway No 13, on a 95 acres plot. Before SMIORE sold the plant, it operated one 15MVA and two 20 MVA furnaces. After take over, SMPPL is already operating the 15 MVA with state grid power and proposes to also re-start the 20 MVA furnace purchased by ETA, as stated earlier. SMPPL proposes to set up a 32 MW Thermal Power plant to secure a dependable power supply source. The power plant is located within the premises of the ferroalloy complex. SMPPL has decided to install the power plant with air cooled condensers to preserve the available water for the process needs. SMPPL proposes to relay a broad gauge railway siding, on the existing Hospet-Gunda railway line which runs along the boundary of the complex, to receive imported coal from Chennai port.

 

CHOICE OF THE PRODUCT

The submerged arc furnaces are capable of producing various alloys. Choice of the product is depend upon the availability of raw materials and the market conditions such as demand and price of ferroalloys. For the purpose of this report, silicomanganese whose consumption has increased over the years and for the production of which raw materials can easily sourced, has been considered in both the furnaces.

 

IMPLEMENTATION STRATEGY

EIPL has successfully restarted the 15 MVA furnace with power from the state grid through Gulbarga Electricity Supply Company (GESCOM), the public power company responsible for transmission and distribution of power in the part of state in which Vyasankere is located. Going by this experience, it will not be difficult to restart the 20 MVA furnace as soon as the relining work for the furnace is completed.

The power plant is expected to be commissioned in18 months (middle of 2009) when power will be available at competitive rate. Till then two furnaces will produce silicomanganese as long as the product is demand and is viable with state grid power.

 

PRESENT STATUS OF THE PROJECT

Estimated Capital cost of the project is as shown in the table below:

SL No Item Rs Crore
1 Cost of the Equipment as finalised 105.66
2 Design Engineering 2.00
3 Off State Facility 6.75
4 Preliminary, pre-operative & start up Expenses 0.50
5 Cost of transmission line and DCS for Fce 1 3.00
6 Contigency @ 5% 5.90
7 Margin Money for working 5.33
8 Repair of 20 MVA furnace 5.10
9 Interest during construction 10.77
  Total 145.00

Apart from the above capital cost, SMPPL will be required to provide Bank Guarantee to extent of about Rs 10 crore to avail EPCG facility for import capital goods. Thus, the total capital required is Rs 155 crore. Out of this, Promoters are ready to invest Rs 38.75 crore as equity and would look for Rs 116.25 crore including the BG facility for Rs. 10 crore from the funding institutions. Since sufficient physical progress has been achieved, promoters have already started spending amount for the power plant which can be reckoned as the amounts towards equity.

Sandur

The two furnaces will be producing about 45,000 tonnes of Silicomanganese per annum. Marketing for the SiMn produced so far has been done by M/s Metsil Exports Ltd who has agreed to extend the facility when both furnaces are in operation. The major raw material is manganese ore. EIEPL has made and agreement with SMIORE prior to purchasing the facility from them to support the operations with supply of required quantity of Mn ore. Moreover, if the present market trend where Ferrosilicon (FeSi), a very power intensive product, has become scarce and is huge demand to continues, then the 20 MVA furnace can also be used to produce about 15,000 tonnes per year FeSi for which raw materials are abundantly available quartz and charcoal which can easily be arranged.

The loan from Bank will be repaid by sale of ferroalloys which is going by present market trend is not a problem. However, the ferroalloy plant whose capital value (including industrial land to the extent of about 95 acres on the main National Highway) conservatively estimated at Rs 44 crore is available as additional security to the funding institutions apart from lien on the power plant.

 

 

 

 

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