Tata Steel and ArcelorMittal-Nippon Steel India (AM/NS India) may not bid for National Mineral Development Corporation's (NMDC) privatisation-bound, under-construction 3 million tonnes per annum (mtpa) steel unit at Chhattisgarh's Nagarnar.

This leaves JSW Steel, Jindal Steel and Power, and new entrants into the steel sector like Adani Group and Vedanta in the fray.

In October 2020, the Centre had approved the demerger of the unit from the parent NMDC and strategic disinvestment of the demerged entity by selling its entire stake in it to a strategic player. NMDC is likely to finish the demerger process by August-September, coinciding with the commissioning of the facility. Bids for the demerged entity would be called for following this.

NMDC may spend around Rs 22,000 crore, higher by Rs 6,500 crore than the original estimate, for the plant mainly due to seven years of overrun.

Sr VP & group head, corporate sector ratings, ICRA, Jayanta Roy, told the media that the long-term outlook for the steel industry in India is positive, given the huge investment expected in infrastructure. Therefore, a sizable plant that is at a very advanced stage of commissioning should be appealing to steel players, since a greenfield steel project, otherwise, has a long gestation period.

A Greenfield steel facility the size of Nagarnar is rare. Barring a greenfield unit of JSPL of the 6 mtpa size at Odisha's Angul, commissioned in 2017, no key greenfield steel unit has come up in current times. Meanwhile, steel companies have raised their capacities, but those are via the brownfield route and debottlenecking of the existing units.

The Nagarnar steel plant is located on 1,940 acres and has about 2,180 acres of land in total. In the next phase, the facility capacity can be grown by another 2 mtpa to 3 mtpa without requiring more land.

The product mix of the unit is also appealing. Apart from hot-rolled coils and auto-grade steels, it will have grades for creating API pipes, employed in modern infrastructure, and products for manufacturing LPG cylinders.

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