Ispat Industries has tied up with Shell LNG to secure an additional requirement of gas for ramping up its sponge iron production capacity and therefore reducing dependence on scrap and sponge iron from the market.

According to market sources, LNG from Shell's Gujarat terminal will be transported by GAIL India to meet Ispat's requirement and the move, poised to have a positive impact on the company's bottom-line, is expected to save around Rs 200-250 crore per year with higher captive sponge iron production through increased availability of gas from Shell.

Shell's LNG would be transported through the Dahej-Uran gas pipeline now in place. Though the installed sponge iron capacity of the plant is about 1.6 million tpy, it produces only 1.1-1.2 million tpy using natural gas from ONGC, transported by GAIL India.

With LNG flowing in to Ispat steel complex in next two-three months time Ispat's captive sponge iron production is expected to increase by approximately 45% to 1.6 million tpy. This would replace buying of high priced scrap and sponge iron from the market to feed Ispat steel making process.