Site selection activity for a greenfield steel plant


Site selection activity for a green field steel plant

The site-selection process is conducted to identify possible sites for a proposed green field steel plant and to compare their relative merits based on various criteria. The selection of a suitable site is a very critical activity. The decision of site selection is very important since the investment is very large and it influences the economies of the area very much. It is a strategic decision that cannot be changed once taken. The changes in selected site can be done only with a considerable loss of time and money. Normally the final site selection is done after evaluating several sites.

Factors affecting site selection process

The site selection process has become increasingly complex because of the plethora of environment laws and regulations as well as the greater public awareness and involvement in various issues influencing site selection.

In present investment atmosphere, site selection issues are characterized by their multi objectives and numerous stake holders. To appreciate the complexity of the selection process, the factors influencing the site selection issues are described below.

  • Numerous possible sites – There is possibility that a large number of possible sites may be available which can satisfy the selection criteria to varying degree.
  • Contradicting objectives – There can be contradictions in some of the objectives. For example the objective of keeping minimum capital investment may contradict with the objective of keeping a long term safe environment..
  • Intangible objectives – These are the objectives which cannot be quantified.
  • Diversity of Interest groups – Investment decision at a particular site may impact several public groups who may have diversity of interest. The groups not satisfied with the investment decision can create problem.
  • Value tradeoffs – Decisions regarding value tradeoffs especially among multiple contradicting objectives are challenges faced during site selection.

Selection criteria

In a site selection process the initial cost is a significant driver. But it is necessary to consider all the criteria in order to make the right decision.  The considerations which have considerable influence in the selection of a suitable site are as follows.

  1. Availability and cost of the land for planned capacity and future expansion
  2. Existing use of land and its impact on land acquisition
  3. Present accessibility of land
  4. Natural and climatic conditions based on meteorological data
  5. Seismic stability of the site
  6. Soil characteristics at the site
  7. Land topology at the site
  8. Location of forest area especially reserved forest
  9. Availability of the rights of way
  10.  Availability and nearness of raw material sources including fuel
  11.  Availability and nearness of market for saleable products
  12.  Availability of water source
  13. Availability of power source
  14. Nearness to rail network
  15. Nearness to road network
  16. Nearness to port and airport
  17. Availability of communication network
  18. Distance from populated area
  19. Distance from national park, wild life area and protected area
  20. Distance from historic (heritage), archeological and tourist areas
  21. Distance from defense establishments
  22. Distance from major river
  23. Cost involved in site development for starting of construction activity
  24. Percentage of tribal population in the area
  25. Availability of local skilled and semi skilled manpower
  26. Availability of local manufacturing facilities
  27. Environment and pollution related issues
  28. Issues related to waste disposal
  29. Availability of Government incentives
  30. Uncertainties due to government legislations

The goal of a site selection exercise is to find the best location which satisfies the above criteria. Only an ideal site will meet the requirements against all the above criteria. Hence the site selection process normally involves two phases i) site screening which is identification of a few number of likely sites best suiting the selection criteria and ii) detailed examination of each short listed site to decide the most suitable site. The selection process includes the optimization of a number of objectives. For this it is essential that the team involved in site selection should have fairly good knowledge of the project.

A typical map of selected site for a steel plant in Maharashtra state is at Fig.1.

 

site selection map

Fig.1  Map of a selected site in Maharashtra for a steel plant