Govt cancels steel project proposed by kin of YSR

The Andhra Pradesh government asked the AP Mineral Development Corporation (APMDC) to terminate the agreement entered into with Rakshana Steels Limited for supply of iron ore to the steel plant proposed by the firm.

The move assumes political significance as Rakshana Steels is promoted by Anil Kumar, son-in-law of former chief minister YS Rajasekhara Reddy. However, Anil Kumar had earlier denied having any connections with the company.

APMDC had signed an agreement with the company, which was short listed for setting up a joint venture steel project and an ore benefication plant at an investment of Rs 500 crore along with its consortium partners, Ispat Industries and Amoda Iron and Steels Private Limited in Khammam district.

 

The government, in its orders issued on February 24, 2009, had directed APMDC to supply iron ore from the deposits available in Bayyaram, Garla and Nelakondapally in Khammam district and Guduru in the neighbouring Warangal district to the project apart from being a joint venture partner in the project. According to the orders, the state mining agency would get a 1.5 per cent equity stake in the project and 16 per cent premium on the cost of production of iron ore to be supplied to the project in addition to the statutory levies payable to the government. However, this agreement is effective only if APMDC is in a position to operate the mining leases in these areas.

“APMDC has approached the government for permission to cancel the agreement. The government, after obtaining legal opinion, has given a go-ahead to the corporation today,” an official in the state mines ministry told Business Standard.

The issue of the controversial Bayyaram iron ore mines had rocked the state Assembly even when YSR was the chief minister. Besides facilitating the above agreement, the state government had also granted prospecting licence in an area of 55,000 acre in the same region to Rakshana Steels.

However, Rosaish, who became the chief minster following the sudden demise of YSR in September 2009, had subsequently announced the cancellation of the earlier orders granting prospecting licence to Rakshana Steels. The firm had approached the courts against the government’s decision.

The government is considering the allocation of these low-grade iron ore deposits to Visakhapatnam Steel Plant, according to the officials.