Essar Steel is to pump in USD 160 million (nearly Rs 740 crore) into its Canadian operations to increase production to 3.6 million tonnes per annum thereby catering to the North American demand. In doing so they would also be setting up a captive power plant which would clean up the environment as well.

A chunk of the investment would go towards setting up this co-generation power plant that would cut the steel plant's energy requirements by half. The captive power plant would use waste fuel from the steel plant to produce electricity and is expected to be commissioned by January next year.

Algoma Steel, which was acquired by Ruias-promoted Essar Group last year and renamed Essar Steel Algoma, is firing on all cylinders after the USD 42.3 million revival of its second blast furnace. The furnace was brought back into operation on August 12, this year and has helped increase output to 2.6 million tonnes from 2.1 million tonnes.

The company was delighted to report that it had successfully implemented the best technological and engineering practices from across both the organisations. This has resulted in a 30 per cent improvement in productivity.

According to Armando Plastino, Essar Steel Algoma's COO, he was happy to report that the integration had produced extremely positive results, with both organisations aligned with a view to growth.

The company would spend USD 160 million to further increase production by 1 million tonne in the 12 months upto March 31, 2009. Most of the (funds for) capital expenditure would come from self generated cash, said Sandeep Dixit, Essar Steel Algoma Vice President (Finance).