Hy-Grade Pellets, a 51:49 joint venture between Stemcor of UK and Essar Steel, is planning to invest around Rs.1,000 crore in the next two years.

The investment would involve more than doubling of the existing pelletisation capacity at its Vizag plant in Andhra Pradesh and in setting up a slurry pipeline project. The company would also set up a benefication plant which would produce the direct reduction (DR) grade of iron ore pellets.

The slurry pipeline and benefication plant would entail an investment of Rs.550 crore. The proposed eight million tonne (267 km) pipeline would transport iron ore in slurry form from Bailadila mines in Chhattisgarh to the company's pellet plant at Visakhapatnam. The contract for the construction of the pipeline has been assigned between the company and OAO Stroytransgaz's consortium with Essar Constructions. OAO Stroytransgaz has supplied special machinery and equipment for the implementation of the pipeline project. HGPL is also contructing two slurry tanks with a height of 20 metres and a diametre of 18 metres.

At present, the raw material and iron ore fines are transported through railway wagons via the Kirandul-Kottavalsa railway line. The pipeline project is expected to be completed by October 2004.

In order to match the capacity of slurry pipeline, HGPL has drawn plans to double its pellet production capacity at Vizag plant in Andhra Pradesh from 3.3 million tpa to 7 million tpa. The expansion programme to be completed by next year would entail an investment of Rs.450-500 crore. The technology for the plant has been sourced mainly through Lurgi of Germany.