AMNS India targets 25 mtpa by 2030 amid input cost pressures

“We will have at least 25-26 million tonnes by 2030. It may be a little more or less. 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 around 9 million tonnes per annum (mtpa), will increase the capacity of its Hazira plant near Surat, Gujarat, to 15 mtpa next year and 18 mtpa thereafter. It is also investing in an 8.2 mtpa greenfield facility at Rajayyapeta in Andhra Pradesh’s Anakapalli district.

Oommen said that it could commission these additional capacities by 2030 at the earliest. Its long-term goal is to reach 40 mtpa capacity in the country with possible investments. ₹55,000-60,000 crore between 2025-26 and 2027-28, according to credit rating agency Crisil.

The steel producer is strengthening its raw material and infrastructure base. It increases the pellet production capacity to around 12 million tonnes in Odisha and Andhra Pradesh, and slurry pipelines are available in both locations. The company is also investing in ports, mining assets to secure raw materials and renewable energy, aiming for around 7 gigawatts (GW) of green energy by 2032.

Operational challenges

All the while, Oommen acknowledged that the operating environment for steelmakers is becoming increasingly challenging, especially in terms of costs.

Although the cost of iron ore, a key input, remains high, low steel prices have resulted in low revenues for Indian steel producers. This is squeezing the margins of steel companies and is not enough to support the ongoing aggressive capacity expansion in the country’s steel sector, the official said.

“If input prices come down, steel prices can be calibrated in such a way that we create a reasonable 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 in an interview at the company’s offices in Mumbai’s Bandra-Kurla Complex. he said.

AMNS India meets most of its iron ore needs (about 12 million tonnes per year) from its own mines. The company is also buying around 8 million tonnes from state-run iron ore producer NMDC Ltd. However, analysts at Crisil noted in June that the firm’s exposure to uncontrolled raw material sources could increase with the upcoming capacity increase.

Calls for cheaper iron ore prices are not isolated. Indian steel producers, squeezed by low-cost imports especially from China, were forced to sell the alloy at the lowest prices in the last five years. To ease its pain, the industry has been lobbying the government for policy reforms that would reduce the cost of iron ore, a key input.

In August, Commerce Minister Piyush Goyal chaired a meeting on reforms to increase iron ore and steel production, aimed at increasing ore supplies and reducing steel production costs. This led to the formation of an advisory committee, chaired by Sanjay Lohiya, additional secretary, ministry of mines, comprising officials from key ministries and representatives of major steel producers and miners to recommend changes to encourage iron ore production.

However, two major mineral producing states have opposed proposed changes to iron ore auction rules due to fears of lost revenue, and iron ore miners have also opposed an export tax on low-grade iron ore. Stakeholder resistance stalled the reforms and the committee did not meet for more than two months.

“There is stress in the sector. We do not think the current margin level is sustainable. Prices need to increase or costs need to decrease,” Oommen said.

Capacity addition

Crisil, which in June rated AMNS India’s long-term creditworthiness at AA+, just one notch below the highest AAA rating, said the planned investments will be towards capacity expansion, debottlenecking projects, addition of upstream and downstream facilities and completion of acquisition of ancillary assets.

The steelmaker will focus solely on flat steel as it increases its capacity. Flat steel refers to coils and steel sheets used in the construction of consumer goods, automobiles and other industrial applications. This is comparable to long steel used to make wire and rods, including rebar used in construction.

This makes it the only major steelmaker in the country to focus exclusively on flat steel. Peers Tata Steel, JSW Steel, Jindal Steel and Steel Authority of India Ltd (SAIL) have flat and long steel capacities.

“While AMNS India’s operational performance in FY25 was moderate, the same was due to lower steel realisation, amid steady input cost pressures,” Crisil said.

Crisil analysts estimate the company’s consolidated revenue to be around ₹51,100 crore in 2024-25 and earnings before interest, tax, depreciation and amortization (EBIT) above 2024 ₹5,000 crore.

AMNS India reported profit of this much in 2023-24: ₹7,325 crore revenue ₹54,605 ​​crore according to Crisil. Its EBITDA was: ₹9,344 crore.