The Hindu Business Line : Jindal Vijayanagar bags tender to mine iron ore in TN

The iron ore will be supplied to Southern Iron and Steel Co Ltd (SISCOL), an integrated steel mill near Salem, in which the Jindal group acquired a controlling interest.

According to reliable sources, Jindal Vijayanagar Steel Ltd, a Jindal group company, was successful in the bid floated by the Tamil Nadu Industrial Development Corporation (TIDCO), a State Government undertaking, to mine about 1 million tonnes a year of low grade iron ore at Kanjamalai.

The investment is expected to be around Rs 400 crore, according to the sources.

The project will be jointly implemented by Jindal Vijayanagar Steel Ltd, SISCOL and TIDCO and the equity component is likely to be about Rs 135 crore. TIDCO's equity stake will be in the range of 2 per cent to 11 per cent, according to the sources.

Late last year, the Jindal group through Jindal South West Holdings Ltd bought Lakshmi Machine Work's stake in SISCOL. The Jindal group announced plans to increase SISCOL's capacity from 3 lakh tonnes a year of rolled products - bars and rods - to 6 lakh tonnes a year. It also proposes to set up a coke oven manufacturing plant with a capacity of 2.65 lakh tonnes a year for making metallurgical coke.

At present, SISCOL gets its iron ore requirement from the Bellary-Hospet region in Karnataka and, according to the sources, the company has been having problems both in getting the required quantity of iron ore and the number of railway rakes to transport the ore.

After the Jindal group took over SISCOL, iron ore became more easily available through Jindal Vijayanagar Steel, but railway rake availability continues to be a problem. SISCOL, according to the sources, incurs a freight expense annually of about Rs 115 crore.

However, with the Jindal group winning the bid to mine iron ore at Kanjamalai, iron ore transportation should no longer be a problem as the mine will be about 30 km from SISCOL's plant.

The sources said that environment clearance for developing the mine was yet to be obtained from the Union Government. The successful bidder would have to deposit upfront a sum of Rs 120 crore, being the net present value of the flora and fauna in the area. The sources hoped that environment clearance would be obtained in the next six months and the mine developed 18 months after that.

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