Telangana has been waiting for a decade for the promised mega steel plant—a commitment made during the bifurcation of states. In a move that appears to place the responsibility back on Telangana, the central government has instructed the state to find a private partner to initiate the project at one of the locations identified near iron ore mines in Mahbubabad.
During a recent trip to Delhi, Telangana Chief Minister A. Revanth Reddy once again advocated for the establishment of the steel plant. The integrated steel plant, which was promised as part of the Andhra Pradesh Reorganisation Act of 2014, has yet to materialize.
According to reports, the Centre has advised the state government to adopt the model used in Andhra Pradesh, where the state collaborates with a private investor to establish a steel mill. There are two potential locations in Mahbubabad that have been shortlisted, both of which would depend on iron ore feedstock sourced from the Ramandurg or Donimalai mines—critical for steel production. Typically, it takes about 1.5 tonnes of iron ore to produce one tonne of steel.
In Andhra Pradesh, AMNS India—a joint venture partnership between ArcelorMittal and Nippon Steel—has expressed interest in establishing a steel plant with a capacity of 17.8 million tonnes per annum (mtpa) at an expenditure of ₹1.5 lakh crore. This greenfield project is to be executed in two phases, and discussions have recently taken place with the state government and the Steel Ministry, although no official announcements have been made yet.
In meetings involving Telangana government officials and representatives from the Union Home Ministry, it was noted that the Ministry of Steel could play a supportive role and facilitate a feasibility study through Steel Authority of India Limited (SAIL). However, the Telangana government may also consider engaging a private company to develop the steel plant, similar to the approach taken in Andhra Pradesh.
A general benchmark indicates that establishing a one million tonne steel plant requires a capital expenditure of approximately $1 billion, particularly if using the blast furnace method. A prior proposal to establish a steel plant in Khammam district was deemed unfeasible by SAIL.
The Steel Ministry has yet to respond to inquiries from businessline. However, a senior official, who wished to remain anonymous, indicated that while the ministry was tasked with assessing the feasibility of a steel plant in Khammam, their findings concluded it was not viable.
According to the official, a consultancy firm named MECON had previously identified Mahbubabad as a potential site for a steel mill. Additionally, in 2019, Mahbubnagar was suggested as an alternative site, as it is closer to Karnataka, from where iron ore could be sourced.
During a recent meeting attended by representatives from the Telangana government, the Union Home Secretary, and members from the Steel Ministry, various considerations were discussed regarding the two possible sites in Mahbubabad. For one site, the Telangana government expressed a desire to secure captive mines through the Mine Development Operator (MDO) route, while for the other, it planned to procure iron ore at market prices. Furthermore, sources indicate that the Mines Ministry has been requested to reserve around 176 million tonnes of iron ore for the Telangana Mineral Development Corporation (TGMDC) Ltd.
