Essar Steel has commissioned a 6Mt/y pellet making facility at the port of Paradip in Odisha (Orissa) NE India. This is the first phase of a 12Mt/y pellet plant to be commissioned by 2013. Essar Steel is investing Rs 42000M ($756M) in the project as part of its ongoing investments in the state of Odisha.

The facility includes a 12Mt/y iron ore beneficiation plant at Dabuna and a 253km slurry pipe line connecting Dabuna and Paradip. It will reduce the operating costs per tonne and improve the cost competitiveness. The slurry pipeline, apart from being a cost reduction initiative, is also the most environment friendly way of transporting raw material for the pellet plant.

The pellet plant in Paradip along with its plant at Vishakhpatnam in Andhra Pradesh, SE India which has a capacity of 8Mt/y, will fully secure the iron ore requirements for Essar Steel in India, say the Company. The pellet will be suitable for use in Essar's blast furnaces as well as its Corex plant and for gas based DRI production.

The bulk of its iron ore needs have been secured through off take agreements with key players including publicly owned NMDC, private miners in Odisha, and its own captive mines in Jharkhand and Chhatisgarh. In addition, the iron ore beneficiation plant will enable use of low grade iron ore fines abundantly available in the country. The off take agreements, combined with the captive mines and easy availability of low grade iron ore dumps, provides Essar the necessary raw material security to operate the pellet plant in the most cost-effective manner, says the Company.

Pellet will be shipped to Essar's steelplant at Hazira on the west coast of India by sea, loading at Pardip being via a 5km long conveyor. Ultimately, Essar plan to build a 6Mt/y steel plant in Odisha but no date for this is set as yet.

Essar Steel is a 14Mt/y capacity global producer of steel fully integrated for the production of flat carbon steel products. It has a steelplant in Canada, a mine in USA, and Indonesia as well as its main steelplant at Hazira, Gujarat state on the west coast of India which has a capacity of 10Mt/y producing iron from blast furnaces, six gas based DRI modules (at 6.8Mt/y the largest complex worldwide) and two newly installed Corex units - transferred from a failed project, never completed at Busan, South Korea.