BSRM, the biggest steel maker in Bangladesh, has taken a nearly Tk 1,900 crore scheme to set up its second re-rolling plant to expand its capacity and cater to increased demand for public and private construction in the country, it said yesterday.

As part of the bid, the steel industry major is setting up a melting furnace unit to increase its billet making capacity by 2.5 lakh tonnes, and a re-rolling unit to increase its capacity by 6 lakh tonnes per annum at the BSRM Industrial Estate in Mirsarai, Chattogram.

After the expansion, the total steel production capacity of the Chattogram-based business house will be around 24 lakh tonnes by next year, which will be nearly one-fourth of the total steel-making capacity in the country, said two top officials of BSRM.

Of the $175 million project, the steel maker will get $108 million from international financiers, including $50 million from JICA

"We expect the demand for steel will grow in line with the growth of our economy," said Aameir Alihussain, managing director of BSRM Group, which registered roughly Tk 18,500 crore turnover in the last financial year, as per the published accounts.

"Temporarily, we are facing some problems in our economy. But our economy has resilience and it will recover. This is why we are expanding our capacity," he added.

BSRM said it has got support from international financiers, including the Japan International Cooperation Agency (JICA), and local and foreign banks to expand its production capacity.

Of the $175 million project, the steel maker will get $108 million from international financiers, including $50 million from JICA.

A portion of the project cost -- Tk 800 crore or nearly $80 million -- will be met through loans from local financiers in the form of local currency, taka.

The JICA, India's EXIM Bank, Standard Chartered Bank Singapore and Brac Bank Ltd will provide $108 million while the Infrastructure Development Company Ltd (Idcol), Eastern Bank PLC, Prime Bank Ltd and The City Bank Ltd will provide Tk 800 crore altogether.

BSRM will bear the rest of the cost, said people involved in the process.

The steel maker signed the loan agreement with financiers, namely with JICA and others, on October 4 and held a ceremony on October 17 to mark the signing.

Alihussain said this is the first private sector financing by JICA in Bangladesh.

"We are proud of this. They have believed in us and in the future of our country," he added.

In a press statement posted on its website, JICA said this loan will support the construction of a new, environmentally friendly steel plant by BSRM.

"The loan will promote environmental friendliness and reduce greenhouse gas emissions in the steel industry in Bangladesh through the introduction of solar power generation facilities, air pollutant management systems, and water treatment and reuse plants as ancillary facilities," it added.

JICA said in recent years, Bangladesh has been developing large-scale infrastructure such as metros, airports, and harbours with the help of Japan's official development assistance and other funding sources.

In addition, the construction of housing, commercial facilities, and hotels has become more active as average incomes have risen in the commercial sector, it added.

Steel products like rebar are essential materials for the construction of such infrastructure and going forward, the demand for steel in Bangladesh is expected to grow at an annual rate of 15-20 percent, JICA said.

Standard Chartered Bank is working as the sole mandated lead arranger, structuring and coordinating bank for US dollar syndicated loan and agent.

And Meghna Bank Limited and NRB Commercial Bank Limited provided guarantees against the finance from Idcol.

Tapan Sengupta, deputy managing director of BSRM, said the second re-rolling plant is expected to start commissioning from the March-April period next year.