A decade and Telangana is still waiting for the mega steel plant which was promised when the bifurcation of states had happened. In what seems like throwing the ball in the Telangana court the centre has asked the State to scout for a private partner to set up the project at the one of the sites short listed near the iron ore mines in Mahbubabad.

The State Chief Minister, A Revanth Reddy in his recent visit to Delhi, had yet again raised the issue of setting up a steel plant in the State. The proposed integrated steel plant in Telangana is yet to be established, despite assurances given under the Andhra Pradesh Reorganisation Act 2014.

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According to sources, the Centre has asked the State Government to follow the Andhra Pradesh model for setting-up an integrated steel plant, wherein the state government partners with a private investor to set-up the steel mill.

There are two sites – both in Mahbubabad that have been shortlisted. Both sites could source the feedstock from Ramandurg or Donimalai iron ore mines. Iron-ore is a key feedstock for steel-making. It roughly takes about 1.5 tonnes of iron ore to make 1 tonne of steel.

In Andhra Pradesh, AMNS India – a Joint Venture between ArcelorMittal and Nippon Steel – has reportedly expressed interest to set up a 17.8 mtpa steel plant at a cost of ₹1.5 lakh crore. The greenfield unit is to be built in two phases, and meetings in this regard have recently been held with the state government and the Steel Ministry. Official announcements are yet to be made.

At the meeting which Telangana government officials had with Union Home Ministry officials it was observed that the Ministry of Steel may play a promotional role and facilitate the feasibility study by SAIL. However, alternatively, the Government of Telengana may explore setting up of a steel plant in collaboration with a private company as planned in Andhra Pradesh.

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The general thumb rule says, to set up a one million tonne of steel plant, a capex of $1 billion is required (in the blast furnace route). A previous request to set up the steel plant at the Khammam district of Telengana has been rejected by SAIL as unfeasible.

Steel Ministry is yet to respond to the queries from businessline.

A senior official, requesting anonymity, however said, the Ministry’s mandate was to study “the feasibility of establishing an integrated steel plant in Khammam”, and it was found to be “not feasible”.

The Ministry official said, previously the consultancy firm, MECON had suggested Mahbubabad district as a possible site for the plant. And subsequently in 2019, it was suggested that Mahbubnagar, closer to Karnataka, from where iron ore can be procured, may be selected.

This was also pointed out during a recent meeting that was attended by the representatives of the Telengana Government, the Union Home Secretary, representative of the Steel Ministry, among others.

For the two possible sites in Mahbubabad for one, the State Government was keen to have captive mines through the MDO route, in case of the second, it was looking at sourcing iron ore “on – market price basis”. According to sources, the Mines Ministry has also been requested to consider reservation of iron ore of around 176 million tonnes to the Telengana Mineral Development Corporation (TGMDC) Ltd.