The government has allowed state-run Steel Authority of India (SAIL) to sell 25 per cent of its iron ore produced from captive mines and dispose old stock of 70 million tonnes (mt) of low-grade iron ore mines and ores lying at mine heads across the country.
The ministry of steel has stated that more than 162 mt of low-grade iron ore are available at mine heads in India, as the regulations do not permit SAIL to sell these materials to domestic end-use companies.
The move by the ministry through two separate notifications on September 16 is seen as an effort to reduce concerns regarding the expiry of mines. Thirty-one working mines of iron ore are expiring on March 2020. SAIL has the capacity to enhance iron ore production from its captive mines by around 8 mt in 2019-20 and 12 mt by 2021-22.
“The government has given permission to sell 70 mt of sub-grade minerals in the captive mines of SAIL,” the ministry of steel has tweeted. In order to increase evacuation from captive mines, the government has allowed SAIL to offload in a year, up to a quantity equivalent to maximum 25 per cent of total iron ore production in the previous year. For this, the company will have to get clearance from state governments. The government expects the move will help SAIL in meeting its own requirements and also meeting the expected shortfall in domestic iron ore market.
One of the major reasons why SAIL was unable to consume low-grade ores was because the company was not having enough beneficiation and pelletisation capacity. Major states that will come under such captive mining areas of SAIL include Jharkhand, Odisha, and Chhattisgarh. The order will be valid for a period of around two years.
On an annual basis, SAIL’s captive mines reportedly produce around 28 mt of iron ore. According to media reports, SAIL’s captive mines have iron ore resources of around 3,700 mt, of which a large chunk is coming from Jharkhand.