SAIL to appoint developer for 2 of its biggest mines

SAIL has decided to outsource the development of two of its biggest iron ore reserves mines

In a first, the Steel Authority of India Ltd (SAIL) has decided to outsource the development of two of its biggest iron-ore mine reserves Chiria in Jharkhand and Rowghat in Chhattisgarh. The public-sector company plans to invest Rs 10,000 crore for developing the two.

Chiria is estimated to have 1.84 billion tonnes of ore, to be developed in two phases: Seven million tonnes initially and eight million tonnes in the second. Once the developer is decided, a mine would take three to four years to become operational.

Rowghat has 500 million tonnes of ore. SAIL had received environment and forest clearances in 2009 for developing the mines, but the process was delayed because of Naxal activities. The Rowghat mines are crucial for SAIL’s largest steel plant at Bhilai, more because the company is fast depleting its raw material reserves.

A senior steel ministry official told Business Standard SAIL would invite bids to decide a developer-cum-operator in the first quarter of the current financial year.

For the Chiria mines, SAIL has already approved the detailed project report by consultant Hatch Associates of Australia. The process had been delayed by many years due to various issues related to environment clearances, among others. Forest clearance finally came in February 2011.

Development of the mine would give SAIL guaranteed raw-material supply to meet its capacity addition target of 50 million tonnes per annum (mtpa) by 2025, with iron-ore requirements at 80 mtpa. However, the company has scaled down its capacity addition plan of 60 mtpa by 2020 due to the slowdown in the economy. It is in the process of implementing a modernisation programme at an investment of Rs 72,000 crore.

SAIL is looking to acquire some mining assets through International Coal Ventures, a consortium of public-sector firms for buying mines abroad.

SAIL Chairman C S Verma had said: “There are four or five good proposals in the evaluation stage. Prices have crashed in the global market and so have valuations. Prices won’t fall beyond this. It is the best time to buy assets. We are looking at new as well as running mines in Australia, Mozambique and the US. We are much ahead of the preliminary stage”