Vedanta, a globally diversified natural resources company, plans a bigger play in steel manufacturing following the acquisition of Electrosteel Steels earlier this year.

Vedanta Star Ltd, a wholly owned subsidiary of Vedanta Ltd, has paid an upfront amount of Rs 5,320 crore for Electrosteel Steels. The investment is a combination of equity of Rs 1,765 crore and inter-corporate loan of Rs 3,555 crore.

Vedanta Resources executive chairman Anil Agarwal on Tuesday said the company had earmarked an investment of $300 million in scaling up the capacity of Electrosteel Steels and was open to setting up additional capacity in Jharkhand on land adjacent to the existing facility. The company plans to have a total capacity of around 7 million tonnes.

“Electrosteel is producing about 1.5 million tonnes. It has an inherent capacity to produce 2.5 million tonnes with investment of about $300 million. The scale-up is expected in two years,” said Agarwal, who is on a trip to the city with his family.

Vedanta Foundation is setting up an educational institute — Vedanta College — in Calcutta. Agarwal also had an interactive session at the Bharat Chamber of Commerce.

Besides scaling up capacity at Bokaro, the company plans to have another project of 4-5 million tonnes capacity involving an investment of $3-4 billion.

However, while Electrosteel’s planned expansion is set to be completed in a couple of years, the new project could take longer, at least three years after obtaining the necessary clearances.

The company will undertake a feasibility study and has started discussions with Korean, Japanese and Chinese companies for machines and technology.

“We have just acquired Electrosteel Steels and at the moment we are busy scaling up the capacity to 2.5 million tonnes,” said Agarwal.

“We will be doing it (new project) in the same area because it is always good to have synergy. We have some land with us and we may have to acquire little more, but that will not be difficult,” he added.

The company also expects to obtain clearances on an iron ore mine, which will act as a raw material source.

Bengal plans

For Bengal, the company has not entirely shelved its plan to set up an aluminium smelter in Burdwan. The unit, planned in 2008, got delayed because of several factors, including the availability of coal. “We are still working on the feasibility,” he said.

The company is also open to evaluating other business opportunities in the state, including mining. The state government is keen to explore commercial mining for the Deocha Pachami coal block with estimated reserves of 2,102 million tonnes. Agarwal said the block had the potential to unlock substantial revenue for the state government.

Agarwal also said the group was committed to investing $8 billion across its businesses, including oil, aluminium, copper, zinc, steel and silver over the next three years. The investment will be primarily through internal accruals, Agarwal said.

He added the government had to address the issue of continuous import of resources such as oil, gold, coal and iron ore.