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Jharkhand govt gives major ore lease to SAIL

BS Reporter  |  Kolkata 

Rebuffs private steel

In a big setback for private steel companies, the Jharkhand government has written to Steel Authority of India Ltd (SAIL), agreeing to renew the Buddhaburu lease — part of the Chiria iron ore belt — having reserves of 810 million tonnes.

SAIL Chairman S K Roongta said there were a number of breakthroughs in the long dialogue with the Jharkhand government, with the help of the central government. Apart from the Buddhaburu lease, another lease of 200 million tonnes would also be renewed, he said, while discussions would be held for the remaining one billion tonnes of Chiria reserves, linked to the public sector steel major’s new project.

SAIL wants to erect a new steel unit of 12-million tonne capacity in Jharkhand. Typically, a 12-million tonne unit would require 600 million tonnes of iron ore.

S K Roongta Chiria is Asia’s largest iron ore belt, with two billion tonnes of reserves.

Roongta said earlier the Jharkhand government had refused to transfer the lease to SAIL after IISCO got merged with the company. The leases were actually held by IISCO.

However, nine leases have now been transferred to SAIL. Roongta said the other lease, which was very small, would also be transferred.

The settlement would be a big blow for private eyeing Chiria. The world’s largest steel maker, ArcelorMittal, signed an agreement with the Jharkhand government in 2005 to set up a mega steel unit and was assured of supply from Chiria by the state government.

In addition, JSW Steel, Tata Steel and Essar Steel were all eyeing the disputed leases of Chiria after they were cancelled by the Jharkhand government.

In the interim, most of the private bagged prospecting licences (PLs). JSW Steel, Tata Steel and Essar Steel bagged PLs for the Ankua block, part of Chiria but not under the SAIL lease area. ArcelorMittal was allocated a mining lease for the Karampada iron ore deposit, with estimated reserves of 65 million tonnes, much below its requirement.

While Chiria would take care of SAIL’s iron ore needs, for coking coal the company is eyeing acquisitions in Australia, New Zealand and Mozambique. It wants 30-40 per cent assured supply for coking coal.

SAIL would be adding nine million tonnes of production capacity to its existing 13 million tonnes by 2012. The cost of expansion would be Rs 60,000 crore for capacity as well as value addition.

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First Published: Wed, November 18 2009. 01:05 IST