Aniket Pujari“By 2030, we will have at least 25-26 million tonnes. It could be a little more or less. It’s simple math: Hazira plus Rajayepeta,” he said.
The 60:40 joint venture between Lakshmi Mittal-led ArcelorMittal and Japan’s Nippon Steel, which has a capacity of about 9 million tonnes per annum (mtpa), will ramp up capacity at its Hazira plant near Surat, Gujarat, to 15 mtpa by next year and 18 mtpa thereafter. It is also investing in an 8.2 mtpa greenfield plant at Rajayyapeta in Anakapalli district, Andhra Pradesh.
It can commission these additional capacities at the earliest by 2030, Oommen said. Its long-term target is to reach a capacity of 40 mtpa in the country, with likely investments of ₹55,000-60,000 crore between 2025-26 and 2027-28, according to credit rating agency Crisil.
The steelmaker is strengthening its raw material and infrastructure base. It is expanding pellet-making capacity to around 12 million tonnes each in Odisha and Andhra Pradesh, with slurry pipelines already in place at both locations. The company is also investing in ports, mining assets to secure raw materials, and renewable energy, targeting about 7 gigawatts (GW) of green power by 2032.
Operational challenges
All this while Oommen acknowledged that the operating environment for steelmakers has become increasingly challenging, particularly in terms of costs.
Low steel prices resulted in muted realizations for Indian steelmakers, even as the cost of iron ore, a key input, remains elevated. This is squeezing the margins of steel companies, not leaving enough to support the ongoing aggressive capacity expansion in the country’s steel sector, he said.
“If the input prices come down, the steel prices can be calibrated in such a way that we make a decent margin for our future expansion, and the user industry will also benefit from this. Inflation will be low, and the user industry will have steel at competitive prices,” Oommen said during the interview at the company’s offices in Mumbai’s Bandra-Kurla Complex.
AMNS India meets much of its iron ore requirements, about 12 million tonnes a year, through captive mines. It also buys about 8 million tonnes from state-run iron ore producer NMDC Ltd. However, with upcoming capacity expansion, the firm’s exposure to non-captive sources of raw material may go up, analysts at Crisil noted in June.
Its calls for cheaper iron ore prices are not isolated. Squeezed by low-cost imports, especially from China, Indian steelmakers have been forced to sell the alloy at prices that are the lowest in five years. To alleviate its pain, the industry has been lobbying the government for policy reforms that would lower the cost of iron ore, a key input.
In August, commerce minister Piyush Goyal chaired a meeting on reforms to boost iron ore and steel production, aimed at increasing ore supply and lowering steelmaking costs. This led to the formation of an advisory committee under Sanjay Lohiya, additional secretary in the ministry of mines, comprising officials from key ministries and representatives of major steelmakers and miners, to recommend changes to spur iron ore output.
However, two major mineral-producing states have opposed proposed changes to iron ore auction rules over fears of revenue loss, and iron ore miners opposed an export duty on low-grade iron ore. Resistance from stakeholders has stalled the reforms, and the committee has not met for over two months.
“There is stress in the industry. We don’t think that the current level of margins is sustainable. The prices have to go up, or the costs must come down,” Oommen said.
Capacity addition
The planned investments will go towards the completion of the capacity expansion, debottlenecking projects, addition of upstream and downstream facilities, and acquisition of ancillary assets, noted Crisil, which has rated AMNS India’s long-term creditworthiness at AA+, just one notch below the top AAA rating, in June.
The steelmaker will focus exclusively on flat steel as it increases its capacity. Flat steel refers to coils and sheets of steel used in making consumer goods, automobiles, and other industrial applications. This compares to long steel, which is used to make wires and rods, including rebars used in construction.
This makes it the only large steelmaker in the country with an exclusive focus on flat steel. Peers Tata Steel, JSW Steel, Jindal Steel, and Steel Authority of India Ltd (SAIL) all have flat and long steel capacities.
“While AMNS India’s operational performance in FY25 witnessed moderation, the same was due to lower steel realization amid steady input cost pressures,” Crisil said.
The Crisil analysts estimate the company will report consolidated revenue of around ₹51,100 crore in 2024-25 and earnings before interest, taxes, depreciation and amortization (Ebitda) of more than ₹5,000 crore.
In 2023-24, AMNS India reported a profit of ₹7,325 crore on revenues of ₹54,605 crore, according to Crisil. Its Ebitda was ₹9,344 crore.
