Jindal Steel to invest $2.4B to boost capacity, citing improving demand prospects

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One of India’s foremost steel companies, Jindal Steel & Power Ltd., has announced plans to invest U.S. $2.4 billion to increase capacity over the next six years as recovery from the COVID-19 pandemic boosts steel demand.

“Domestic steel prices have recovered from the lows of the COVID-induced volatility and are increasing spurred by improving demand prospects,” the firm said in its August investor presentation.

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Jindal Steel to ramp up capacity

India

Zerophoto/Adobe Stock

The steelmaker will increase its total capacity to 15.9 million tons (MT) by March 2025 from 8.6 MT, it said in an investor presentation recently. According to the statement, the company plans to more than double pellet production capacity to 21 million tons by 2024.

On Monday, in a statement to the stock exchanges, the steel company announced that its board had approved fundraising measures that include issuing non-convertible, senior, unsecured, fixed rate or LIBOR notes worth U.S. $1 billion.

JSPL’s plan includes raising money as part of its long-term goal of becoming debt-free and increasing production capacity to 15.9 MT by FY 2024.

In its Vision 2030 laid out earlier, the steelmaker said it aimed to increase its production capacity to 27 MTPA using clean energy sources. In May this year, the company said it was on the way of cutting down its debt while going for a new capital expenditure cycle.

JSPL intends to expand its production capacity, again at Angul, from 9 MT as of FY 2021. JSPL is mulling a foray into container-making from its Angul facility, starting with a manufacturing capacity of 15,000 containers per year.

Jindal Steel is also setting up a 2.25 MT hot rolled coil plant in the Nellore district of Andhra Pradesh, a southern province. The HRC would mainly target export markets, since the plant is located near Krishnapatnam Port in South India.

In addition, the New Delhi-based company will more than double its pellet production capacity by 2024 to 21 MT, according to news reports.

New investment

JSPL Chairman Naveen Jindal’s mill, once India’s largest steelmaker by market value, is making fresh investments for growth after aggressively reducing its debt levels by more than 60% since last year.

The firm has added jobs. Furthermore, the Indian government has invested about U.S. $1.3 trillion in infrastructure. In that vein, JSPL’s expansion plan is based on expectations of robust consumption, the Business Standard reported.

According to Jindal Steel, annual demand will recover from pandemic-related disruptions and grow 8% to 9% by 2025, the report notes.

The steelmaker reported steel production of 2.01 million metric tons in Q1 of FY 2022. That marked a decline from 2.07 million metric tons in Q4 FY 2021. However, it marked an increase from 1.67 million metric tons in Q1 FY 2021.

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