The Tata Sponge Iron Ltd, the largest sponge iron producer in eastern India located at Joda in Orissa's Keonjhar district, has plans to set up a Rs 1,000 crore (Rs 10 billlion) expansion project within the next ten years, including a 1 million tonne steel plant.

The steel project would be through the electric arc furnace route to convert sponge iron into mild steel billets for manufacturing long products, the company's managing director Ashok Pandit told reporters in Bhubaneswar on Sunday night.

The expansion programme included establishment of three kilns and a power plant requiring investment of Rs 300 crore (Rs 3 billion) to Rs 400 crore (Rs 4 billion) while the steel project would need about Rs 600 crore (Rs 6 billion).

"We'll follow the sponge iron route for steel making as it is cheaper than that made through the blast furance and coke oven route," he said.

TSIL, which has been making profits consistently for the past 12 years and paying dividends, had earned a profit before tax of Rs 53.07 crore (Rs 530.7 million) against a total income of Rs 210 crore (Rs 2,100 million).

The company had declared 50 per cent dividend for 2003-04, Pandit said.

The company set up in 1983-84, which incurred losses initially, started to make profit by 1995-96, he said.

Pointing out that there was a huge market for sponge iron in the country due to shortage of scrap for steel plants, Pandit said TSIL proposed to set up three more kilns of 150,000 tonnes per year capacity to produce an additional 450,000 TPY of sponge iron.

It would also simultaneously produce 30 mw of power by utilising the steam released by the plant of which 10 mw would be used by the company and the rest 20 mw would be sold, he said.