Tata Steel may invest ₹5,000 cr to develop Subarnarekha port

23 july 2018

In what could emerge as an important port on India’s East coast, Tata Steel plans to develop the Subarnarekha port at the northern-most tip of Odisha, where the river Subarnarekha merges with the Bay of Bengal.

The port, with the ability to manage large-sized ships, will be developed at a cost of ₹4,000-5,000 crore in three to four years, said an industry source privy to the matter.

The precise location in north Odisha will allow the Subarnarekha port immediate proximity to West Bengal, Jharkhand, Bihar, and even Nepal.

The port is likely to have the potential to handle large ships with 180,000 dead weight tonnage capacity with 18-metre draft that will help Tata Steel lower its transport and product costs.

Other ports in the vicinity have lower drafts — Dhamra has a draft of 17.2 m, Haldia 7.5 m and Paradip ports 14.5 m. “To achieve the required depth, a navigation channel, which will be longer than at Dhamra, will have to be dredged. However, in comparison to Haldia, which is a riverine port, the siltation in the channel will be negligible here,” said an industry source requesting anonymity.

The port will also need a rail-link of around 50 km. The rail distance from Subarnarekha to Tata Steel’s Jamshedpur plant is around 270 km, about 100 km shorter than from Dhamra port, which is 374 km. The savings in terms of rail freight for imported raw materials will work out in the range of ₹150-250 per tonne.

“During the first phase, the plan is to build 3-4 berths with a handling capacity of 20-25 mt, which can handle dry bulk cargo like coal, iron ore and limestone, and other general cargo like steel,” the source said. In subsequent phases, the port can be expanded to handle containers, liquid bulk cargo and LNG/LPG as per market demand.

The port can also provide closer access to Chittagong port, Bangladesh, in future for transhipment of containers. Tata Steel, which has already announced plans to buy a majority stake in the port, holds a 7 per cent stake now.

Cargo handling

As of now, Dhamra port, which is closest to Tata’s Kalinganagar steel plant, the handles majority of its cargo. Paradip port has been historically handling almost 90 per cent of the cargo for Bhushan Steel, which has been acquired by Tatas. Paradip and Dhamra also handle cargo for the Jamshedpur plant.

Steel plants require coking coal as an input, which are imported from Australia, South Africa and New Zealand to ports and then transported by rail to the plants. The output — steel — is moved across the country largely by rail and road, with some steel being moved along the coastal routes as well.

But handling steel along the river route — through the Subarnarekha, which originates from Ranchi in Jharkhand and meets the Bay of Bengal in Balasore district of Odisha — requires the development of good infrastructure.

Tata Steel had announced that it would acquire a majority equity stake in Creative Port Development Pvt Ltd (CPDPL). Promoted by two IITians, Ramani Ramaswamy and Ramaswamy Rangarajan, CPDPL specialises in developing ports, and holds the rights to develop the Subarnarekhaport on a build-own-operate-share-and-transfer basis from the Odisha government.

The port development is envisaged through a wholly-owned subsidiary of Tata Steel, called Subarnarekha Port Pvt Ltd.

The port has received all the requisite clearances including a no-objection-certificate from the Defence Ministry and has been allotted around 700 acres of land by the State government.

Source: THE HINDU BUSINESSLINE