SAIL closing in on NMDC's iron ore capacity

The gradual ramp-up of SAIL's captive iron ore capacity has brought it within striking distance of the country's largest iron ore producer, NMDC, which supplies to major steel producers like JSW Steel and Essar.

In 2017-18, SAIL's finished iron ore production capacity was 37 million tonnes and it is still in expansion mode. "The figure includes production from iron ore mines where capacity expansion work is currently being carried out," said a SAIL spokesperson.

NMDC, which is also expanding its capacity, had an iron ore mining capacity of 43 million tonnes in 2017-18. 

In terms of production, however, the gap between SAIL and NMDC was slightly wider, the public sector steel maker being a captive user. Typically, for producing one tonne of crude steel, 1.6 tonnes of iron ore consumption is assumed.

SAIL's iron ore production was 27 million tonnes in 2017-18 and NMDC's 35.5 million tonnes. SAIL's crude steel production during the period was at around 15 million tonnes.

However, SAIL, which has achieved a rated capacity of 21 million tonnes per annum of crude steel capacity, is in the process of ramping up production from its new units as well as optimally utilising the old units. This is part of SAIL's modernisation and expansion plan.

In tandem with SAIL's steel expansion, mines are also being expanded. The capex plan for augmentation of all raw material facilities is Rs 102.64 billion.

"The process of expanding mines' capacities are going on and in various stages of development. As they will be completed, more capacity will come on-stream and will take care of modernisation requirements," a company spokesperson said on iron ore.

SAIL sources said it was possible that in the near term, the iron ore capacity could be increased to 42 million tonnes. That could happen in the next two years. 

SAIL's expanded steel capacity would have 100 per cent iron ore security.

Merits mention, some of the expansion projects at the mines had not yet got environmental clearances. 

For instance, Chiria mines, which is believed to have reserves if two billion tonnes, is yet to receive Stage II forest clearance from the Ministry of Environment, Forest and Climate Change. It will be expanded from a finished product capacity of 0.75 million tonnes to 5.80 million tonnes. 

At one point, SAIL had a plan of taking its steel capacity to 50 million tonnes. However, the current modernisation and expansion, which cost around Rs 650 billion, has been delayed. The expansion of capacity from 13.5 million tonnes to 21.4 million tonnes was supposed to have been completed by March 2013.

Currently, the focus was on ramping up the capacity to 21 million tonnes apart from completing the mines expansion projects.