The £1.5 billion UK-based steel company, Stemcor, is exploring the possibility of picking up a stake in a 1.5 million tonne pig iron plant in Orissa. The company has kicked off the negotiation process but a final decision on the acquisition will be taken by December.

Stemcor India managing director Matthew Stock told Business Standard: "We are looking at the possibility of acquiring a stake in a pig iron plant in Orissa. We should be able to take a final decision by the end of this calendar year."

The parent company would be making "significant investments" if this deal went through, he added. He, however, declined to name the unit.

There are around 25-30 operational pig iron projects in Orissa. However, only 2-3 plants have a capacity of around 1 million tonnes.

Stemcor has a presence in India through its subsidiary, Steel Corporation of Gujarat, and through a joint venture with Essar Steel and Hy-Grade Pellets.

Steel Corporation of Gujarat has a cold-rolling and galvanizing manufacturing facility near Hazira, with an installed capacity of 1 million tonne. Stemcor holds 51 per cent in Hy-Grade, which has a 3.3 million tonne pelletisation plant at Visakhapatnam.

Stemcor will also invest around Rs 250 crore (Rs 2.5 billion) for enhancing the capacity of Hy-Grade from the current 3.3 million tonne to around 8 million tonne per anuum.

"We will be bringing in around $50 million for the upgradation of the capacity, while the balance will be brought in by the local partner," Stock said.