Telangana’s Steel Plant Dream: Centre Suggests AP Model
Telangana’s long-standing wait for the establishment of an integrated steel plant, promised during the bifurcation of states a decade ago, continues to face hurdles. In a significant development, the Union Government has now advised Telangana to follow the model adopted by Andhra Pradesh to set up the steel plant. This approach involves the state government partnering with a private investor to initiate the project, rather than relying on public sector undertakings.
The issue was once again raised by Telangana’s Chief Minister, A. Revanth Reddy, during a recent visit to Delhi, where he sought clarity on the plant’s long-delayed progress. Despite the commitments made under the Andhra Pradesh Reorganisation Act of 2014, the plant has yet to materialise in the state. Sources have revealed that the Centre has urged the state government to look into private-public partnership models, similar to the one employed by Andhra Pradesh for its own steel plant. Specifically, Telangana has been encouraged to collaborate with a private investor to establish the steel mill at one of the two shortlisted sites near Mahbubabad, an area rich in iron ore deposits, including those from the Ramandurg and Donimalai mines. Iron ore, a critical feedstock for steel production, is essential in large quantities for such a project, with the ratio being roughly 1.5 tonnes of ore for every tonne of steel produced.
In Andhra Pradesh, the government has been working with AMNS India, a joint venture between ArcelorMittal and Nippon Steel, to develop a massive 17.8 million tonnes per annum (mtpa) steel plant. This greenfield unit, with an estimated investment of ₹1.5 lakh crore, is expected to be developed in two phases. The project has garnered significant attention, with meetings held between the state government and Steel Ministry officials, although no official announcements have been made yet. At a recent meeting between Telangana government representatives and officials from the Union Home Ministry, it was discussed that the Ministry of Steel might play a role in facilitating a feasibility study by Steel Authority of India Limited (SAIL) for the proposed steel plant. Alternatively, Telangana could explore the possibility of partnering with a private player, akin to Andhra Pradesh’s model, to bring the project to fruition.
However, there has been resistance to certain earlier proposals, such as setting up a plant in Khammam district, which SAIL deemed unfeasible. According to a senior Ministry official, the earlier studies conducted by consultancy firm MECON had suggested Mahbubabad as a more viable location for the plant. Additionally, in 2019, Mahbubnagar, closer to the iron ore-rich regions of Karnataka, was also considered a potential site. In the case of the two shortlisted locations in Mahbubabad, the Telangana government has expressed its preference for securing captive mines through the Mine Development and Operations (MDO) route for one of the sites, while for the other, it has proposed sourcing iron ore at market prices. The Mines Ministry has also been asked to consider reserving approximately 176 million tonnes of iron ore for the Telangana Mineral Development Corporation (TGMDC) Ltd., which would support the steel plant’s feedstock requirements. Despite the ongoing discussions and feasibility studies, the state remains in a state of anticipation, waiting for concrete action on a project that holds the potential to significantly boost Telangana’s industrial landscape and employment opportunities.
