Jindal South West Steel Limited (JSW Steel Ltd), the flagship company of the JSW Group, is seeking allotment of a captive iron ore mine in the iron ore-rich Bellary-Hospet region of north Karnataka. The company has applied to the state government and is waiting for the grant of the mining lease.
The company currently procures iron ore from the open market for its steel plant at Toranagal in Bellary as the state government is yet to fulfil its assurance of grant of a lease for a mine with reserves of 110 million tonnes in the Bellary region.
The company needs its own mine to expand the steel plant to 11 million tonnes per annum. This is scheduled to commence in 2010. Currently, it operates a steel mill with a capacity of 7.8 million tonnes.
The company required around 25 million tonnes iron ore to feed its plant once the expansion was completed, said Sajjan Jindal, vice-chairman and managing director, JSW Steel Ltd.
“We have been looking for mines since the start of our steel plant. But some people have gone to court against allotment of mining lease to us. We are waiting for the state government to sanction certain mining concessions. Once these come, we will take up the next phase of expansion,” Jindal told Business Standard.
Acquisition of a mine in Bellary is crucial for the company as it is in the process of expanding its steel-making capacity to 11 million tonnes per annum by 2010. The company has also received the state government’s approval to further expand the capacity to 16 million tonnes per annum at an investment of Rs 20,000 crore.
He said the proposed acquisition of the mine would meet around 50 per cent of the company’s raw material requirement. The the remaining would be procured from the open market, he added.
“There are not enough deposits at the mine we are looking to acquire. But, we are also developing new technologies to use low-grade iron ore.”
JSW Steel Ltd is the single-largest investor in the state. Its investments amount to Rs 21,700 crore.
For the year ended March 2009, the company reported a 73 per cent drop in its net profit to Rs 458.5 crore on a turnover of Rs 15,179 crore, a growth of 20 per cent over the previous year.