Ferrochrome maker is planning to set up a 1300mw power plant and is scouting for chrome ore and thermal coal assets abroad.
After meeting backward integration targets and forming a venture with Korean giant Posco, Indian Metals and Ferro Alloys (Imfa), country’s largest ferrochrome producer, has set sights on commercial power generation and acquisition of mining assets overseas.
“We are at a preliminary stage of finalising our new business initiatives, but these are two focus areas for our next level of growth, apart from ferrochrome production,” Subhrakant Panda, managing director of Orissa-based Imfa, said.
Imfa currently has an installed capacity of 2,75,000 tonnes per annum (tpa).
Under its power venture, Imfa is planning to set up a 1,300mw (2X660 mw) power plant and has submitted a proposal to the Orissa government.
The company has a captive power generation capacity of 108mw, which provides complete backward integration for its power needs.
“By the end of this quarter, we will augment our capacity by another 30mw and by the end of the next fiscal we will add another 120mw,” said Panda.
By 2013, Imfa will have a surplus power of 60-70mw which it will sell to the grid. “Surplus power also gives us the headroom for further capacity expansion,” Panda said, adding it can help the company further expand capacity by 1,25,000 tpa.
Imfa is also looking at acquiring chrome ore and thermal coal assets overseas as yet another business opportunity.
“There are mines available in South Africa, Turkey, Philippines, etc, which we might look at, but we are looking for mines which can add value and makes right business sense for the company,” Panda said.
The growth of ferrochrome is directly related to the growth in the stainless steel sector. “With the government focus on infrastructure, demand from Railways, industrial segment and home appliances, demand for stainless steel is expected to be firm for the coming several years,” said an analyst with a domestic brokerage firm who covers the stainless steel sector.
He said in 2010, out of the total installed capacity of 2 million tonnes in India operating at 75% capacity utilisation, the consumption was up to 1.2 million tonnes and rest was exported.
“This consumption is expected to grow to 1.8-1.9 million tonnes in the next four-five years,” he said, adding that stainless steel demand in the world will be led by China and India.
Panda said there is a huge scope of growth in India as the per-capita consumption of stainless Steel in China is 8-9kg, in India it is merely 2kg, he said.
Ferrochrome, which is produced from chrome ore, is used for the manufacture of stainless steel. Chrome ore, an oxide of chromium and iron, is extracted from the mines and then heated at extremely high temperatures using coke to reduce the chemical composition of the ore to iron-chromium alloy.
This alloy, also called smelted ferrochrome, is left to solidify and then sold to stainless steel manufacturers.
Manufacturing of ferrochrome is a highly power intensive process and all ferro alloy producers have captive units to reduce power costs.
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