Jharkhand ore settlement even more favourable to SAIL

In the settlement between the Union and Jharkhand governments on the Chiria iron ore belt, Asia’s largest, Steel Authority of India Ltd (SAIL) is not only getting a billion tonnes, but is also to be entitled to stake claim on the other, unallocated, billion tonnes for its greenfield and other projects, say sources.

Whatever is left from the balance one billion tonnes, after meeting SAIL’s stated requirements, are to go to the private sector. Right now, only SAIL has any leases on Chiria, which presently meets the requirements of SAIL’s Rourkela unit, part of the need of the Durgapur unit and the need of Iisco’s steel plant.

SAIL has also already proposed to set up a new 12-million tonne (mt) steel plant in Jharkhand. This would translate into a requirement of 600 mt from the remaining billion tonnes. Which leaves very little for the private sector, especially ArcelorMittal, the world’s largest steel maker. Mittal signed an agreement with the Jharkhand government in 2005 to establish a mega steel unit, and was assured of supply from Chiria.

ArcelorMittal did not respond to an e-mail sent by Business Standard. It had earlier indicated there was no question of setting up the plant without the Chiria mines.

Last year, ArcelorMittal was allocated a mining lease for the Karampada iron ore deposit, with estimated reserves of 65 mt, much less than its own stated requirement of 600 mt.

Apart from Mittal, JSW Steel, Tata Steel and Essar Steel were eyeing two leases of a total of six at Chiria, which were under litigation in the Jharkhand High Court (between SAIL and the state government), after being cancelled.

However, subsequently, all three companies bagged a prospecting licence (PL) for the Ankua block, also in the Chiria belt. The PLs were for the part of Ankua not belonging to the SAIL lease area.

Seshagiri Rao, joint managing director and group chief financial officer of JSW Steel, said the decision was expected. SAIL had all along maintained that their requirements should be met first. The Ankua deposit for which JSW has bagged the PL has reserves of around 250 mt. JSW Steel plans to set up a 10 mt steel plant in Jharkhand.

Chiria has proven reserves of two billion tonnes but is not fully explored; it could go up to three billion tonnes in all.