NMDC bets on Rowghat rail project to boost eastern market business

In a move aimed to evacuate minerals from Rowghat, a 235-km long rail line has been proposed

Don't want to miss the best from Business Standard?

The National Mineral Development Corporation (NMDC) would be investing a major share in the Rowghat rail line project in Chhattisgarh’s Naxal-infested pocket to facilitate increasing business in the eastern market.

At present, the state-run mining major does not have any operations in Rowghat that contains the second largest iron ore deposits in Chhattisgarh after the Bailadila Iron Ore Mine. Rowghat Mines' reserves have been assessed at 731.93 million tonnes while Bailadila has an estimated reserve of 1.343 billion tonnes.

In a move aimed at evacuating minerals from Rowghat where the Left Wing Extremists had a considerable sway, a 235-km long rail line has been proposed to be connecting Dalli-Rajhara and Jagdalpur via Rowghat. The project is to be implemented in two phases; the 95 km line linking Dalli-Rajhara to Rowghat Mines in first phase and its extension till Jagdalpur which is located 140 km south of Rowghat in the second.

The construction cost of the first phase would be borne entirely by the Steel Authority of India Limited (SAIL), which had been allotted Deposit F having an estimated reserve of 511 million tonne. The mine is crucial for the SAIL as the reserve in Dalli-Rajhara that is feeding raw material to its flagship entity Bhilai Steel Plant (BSP) is fast depleting.

The Chhattisgarh government has formed a Special Purpose Vehicle (SPV) to implement the second phase of the project. The NMDC would hold 43% stake in the company while IRCON would have 26%, SAIL 21% and Chhattisgarh Mineral Development Corporation (CMDC) 10%. The project would be built with an investment cost of over Rs 2000 crore.

While the SAIL has a business interest in the project that would ferry iron-ore to Bhilai, country’s largest iron ore producer and exporter NMDC would be investing as part of long drawn strategy. As of now, NMDC had a single evacuation route; transporting iron-ore to Visakhapatnam port through the Kirandul-Vizag line. From the port, the mineral is disposed to different destinations.

“If the NMDC is investing such a huge amount, there must be some plan on card,” company spokesperson told Business Standard. The Rowghat rail line (that would finally connect to Howrah-Mumbai rail line) would help NMDC to increase its business in the eastern market. The route would help delivery time consumption.

Besides, the company is also setting up 3 million tonne steel plant in Nagarnaar. “The rail line would help in the evacuation of steel conveniently to the northern and eastern market,” the spokesperson said.