RKKR Steels, one of oldest steel manufacturers in southern India, is set to invest Rs 4,000 crore on establishing an integrated steel facility in Karnataka. Terming it as the country’s largest greenfield steel projects, the company said it proposed to set up an alloy and carbon steel manufacturing complex with a capacity of two million tonnes a year.

"The Karnataka government is receptive to the idea and is seriously considering our proposal," Rajiv Rai, chairman, RKKR Steels Ltd, told Financial Chronicle.

The Chennai-based company proposes to implement the project in two phases. The first phase will see an investment of Rs 2,300 crore, and create one million tonne capacity. In the second phase, it intends to scale up the capacity to two million tonnes, with total investments reaching Rs 4,000 crore. The project is expected to come up in central Karnataka and generate 5,000 job opportunities.

Rai said the Karnataka government had promised to provide all assistance. "We recently met the chief minister, who was extremely receptive to the idea," he added.

The proposed steel plant may source iron ore from the Bellary-Hospet region that has plenty of high-grade iron ore reserves. RKKR Steels, which is, at present, establishing a Rs 1,600-crore five lakh tonne per annum integrated steel plant project at Krishnapatnam in Andhra pradesh, is also looking at acquiring some mines in Karnataka. "We are talking to a few mine companies in the state, which are in varied stages of finalisation," said Rai.

"As there is no demand for iron ore from China and there are no new enquires from that country, Indian iron ore firms are willing to talk to Indian steel manufacturers. We see an opportunity and intend to acquire some mines," he added.

According to an Assocham study, the steel industry announced capacity expansion plans of 31 million tonnes in the last quarter of 2007-08, in view of growing steel demand. Steel majors have lined up investments of Rs.89,200 crore in steel sector.

"Although our steel demand has been rising by 11-13 per cent, production has only grown by 5.6 per cent during 2007-08. There are a large number of projects in the pipeline, including the expansion plan of Sail, RINL, Tata, Essar, JSW and JSPL. A number of greenfield projects are at different stages of progress, including large foreign projects, such as Posco and Arcelor-Mittal. By 2012, total steel production capacity in the country is forecast to reach 124 million tonnes from the current level of 59 million tonnes," Union minister of steel, Ram Vilas Paswan, said recently.