SAIL to invite bids for appointing MDO for Chiria mines soon

The detailed project report prepared by the external consultant, Hatch Associates of Australia, has already been approved by the company

State-owned SAIL has decided to outsource the development of its Chiria mine in Jharkhand, considered to be among the largest iron ore deposits in the world, and will be inviting bids during the current quarter for appointing a mine developer-cum operator (MDO).

The detailed project report (DPR) prepared by the external consultant, Hatch Associates of Australia, has already been approved by the company.

Accordingly, the Chiria mines, having about 1.84 billion tonnes of iron ore reserves, will be developed in two phases -- 7 million tonnes (MT) in phase-I and 8 MT in phase-II. Its first phase is likely to be operational in 3-4 years after the finalisation of MDO.

"They (the consultant) have given the report, the report has been seen and accepted. We are soon coming out with the notification for inviting bids for appointing the MDO," SAIL chairman C S Verma told PTI.

He did not give specific time line for inviting the bids for appointing the MDO but said that "it will be in days only, much before the quarter ends".

Development of the Chiria mines, considered to be the future raw material lifeline of SAIL, has been delayed by many years due to various issues. In February, 2011, a major stumbling block in its development was removed when SAIL was granted forest clearance by the Environment Ministry.

SAIL had then announced to invest Rs 5,000 crore on development of Chiria mines and production was expected to begin in 2014. The then investment announcement was based on the assumption SAIL will be expanding its steel making capacity to 60 million tonnes per annum (MTPA) by 2020.

Due to this, the iron ore requirements of the state-owned steel-maker's was estimated to increase to 100 MTPA by 2020. Out of 100 MTPA, 40% of the iron ore requirement was planned to be met from Chiria mines.

Since then, several changes have been made in the plans. Instead of 60 MTPA steel making capacity by 2020, SAIL now aims to have 50 MTPA capacity and that too by 2025 under its 'Vision 2025'. Accordingly, its iron ore requirements would also come down to 80 MTPA.

Sources said that for developing Chiria mines, SAIL will have a long-term agreement with the prospective MDO, who will be allowed to develop and operate the mine. In return, the MDO will charge SAIL on per tonne basis for the ore lifted.

Due to shifting of development model to the MDO route, the investment is likely to come down significantly to about Rs 2,600-2,800 crore for its two phase development, they added.

However, a company spokesperson said that scope of work for Chiria mines will be known only at the time of issue of the expression of interest for appointing the MDO, while the project cost will be known when the contract will be finalised.

SAIL meets all its iron ore needs from captive sources. The Chiria mine complex covers about 2,376 hectares which is about 3% of the Saranda forests in Jharkhand.