Ruias-promoted Essar Steel [Get Quote], which plans to raise production capacity to 25 million tonnes per annum, will invest Rs 17,760 crore (Rs 177.60 billion) to put up a 6 mtpa mega steel plant in Karnataka.

The state government has cleared the proposal and the plant is to be set up at Bagalkot, industry sources said, adding that project details were being worked out.

Initially, the plant would have a 3 mtpa capacity which would be doubled to 6 mtpa in the second phase, sources said.

The proposal is to set up a pellet plant, a coke oven plant and a battery in the first phase and the company has asked the state government to lease an iron ore mine for uninterrupted supply of the raw material.

Essar Steel produces 4.6 mtpa at Hazira in Gujarat and plans to increase the capacity to 9 mtpa. Its Indian operations also include an 8 mtpa beneficiation plant at Bailadilla in Chattisgarh and an 8 mtpa pellet complex in Visakhapatanam in Andhra Pradesh.

The company is also working on putting up a 6 mtpa integrated steel plant at Paradeep in Orissa. The project would be developed in two phases.

In addition to its Indian operations, Essar Steel has a presence in Canada, US and Indonesia.

Essar Steel Algoma has 4 mtpa capacity. PT Essar Indonesia, the second largest producer of cold-rolled steel in the private sector in the country, has a rolling capacity of 400,000 tonnes per annum.

Minnesota Steel, which Essar acquired in 2007, plans to set up a 2.5 mtpa integrated steel plant with an estimated cost of $ 1.65 billion.

Already the fifth largest steel producer in the world, India in its national steel policy has envisaged production of the alloy to reach to 110 mtpa by 2019-20.

However, based on the assessment of ongoing projects, the ministry of steel has projected that the country's steel capacity is likely to be 124.06 mtpa by 2011-12.

As per the status of MoUs of private producers with various state governments, India's steel capacity would be nearly 293 mtpa by 2020.