SAIL's Chiria mines output from 2014

Come 2014, and SAIL will start production from Chiria mines — its future raw material lifeline located in the Naxal-prone deep-south Jharkhand. The public-sector steel major is set to finalise an investment roadmap for the project after the completion of a detailed project report this month.

Chiria, with proven reserves of over 1.8 billion tonne, is one of the largest iron ore mines in Asia. When commissioned, it would help the Maharatna company more than quadruple production capacity to around 60 million tonnes (MT) over the next decade.

SAIL is fully dependent on Chiria for all our future expansions, its chairman C S Verma said. “The mine will be our lifeline as the reserves in the other mines we operate are depleting. Chiria mine will become operational in around three years with a likely investment of around Rs 3,500 crore,” he told Business Standard.

SAIL produces over 14.5 MT steel annually, alone accounting for a fifth of the country’s overall 60 MT production of the alloy. The company’s iron ore requirement is set to grow from 25 MT at present to 100 MT by 2020 as production capacity expands to 60 MT over this period. “Chiria will meet more than 40 per cent of this 100 MT requirement,” Verma said.

The capital-headquartered company had earlier appointed Hatch Associates of Australia as a consultant for preparing Chiria’s project report, which would be submitted soon. SAIL plans to develop the mine with an initial capacity of seven million tonne per annum (MTPA). It will be expanded to 15 MTPA in coming years, the company informed in an e-mailed response to a Business Standard questionnaire.

While environment clearance for the mine was already in place, the the BSE-listed company secured the forestry clearance earlier this year from the environment ministry in a precedent-setting move.

In February, environment minister Jairam Ramesh overturned the recommendation of the Forest Advisory Committee and had approved the forest clearance for Chiria in Paschimi Singhbhum district.

Ramesh had defended his decision in favour of SAIL on nine grounds including SAIL’s awaited public offer of Rs 18,000 crore and the company’s “good” track record in Corporate Social Responsibility (CSR). He had, however, attached as many as 13 conditions to the decision including commitment of a Rs 20 crore investment by SAIL in improving wildlife and earmarking two per cent of its net profit towards CSR in the region. Verma, when asked about the possible impact of the riders on the development of Chiria, said his company was complying with these conditions. “In fact, what we are doing is much more than the mandatory requirement of CSR.”

The Chiria iron ore mining complex located in Saranda forest originally belonged to the erstwhile Indian Iron and Steel Company (IISCO). IISCO merged with SAIL in 2006 on the premise that the mines would be made available to SAIL since ithad been forced to absorb substantial losses on IISCO’s account. The entire Chiria complex is spread over 2,376 hectares. SAIL has been permitted to divert 25 per cent of the area – 595 hectares – for 20 years.

SAIL recorded a net profit of Rs 4,881 crore over a marginal 4 per cent rise in total income at Rs 44,858 crore last fiscal (2010-11).