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Ambarish Mukherjee

Bailadila iron ore reserves

New Delhi , Jan. 12

In an unexpected move, the Chhattisgarh Government has withdrawn lease rights for an estimated 100 million tonnes of iron ore reserves in the Bailadila mines from public sector National Mineral Development Corporation (NMDC) prior to its expiry.

It has instead recommended to the Ministry of Mines to issue a prospecting licence to Essar Steel.

Informed sources said that NMDC's lease was scheduled to expire only in 2007, but the Chhattisgarh Government, on the grounds that the public sector was not making use of its lease rights said that the lease was in the lapse category and sent a notice to NMDC, terminating the lease.

Following the termination, the State Government has recommended to the Ministry of Mines to award prospecting licence to the private sector producer Essar Steel.

Final decision

The Mines Ministry, however, was yet to take a final decision on the State Government's recommendations, official sources said.

The NMDC Chairman, Mr B. Ramesh Kumar, told Business Line that the move came despite the company approaching the tribunal under the Ministry of Mines with the objective of developing the mines.

NMDC had the lease rights for Bailadila deposit three, part of deposit two and some pockets in deposit six, deposit seven, deposit eight and deposit nine, all of which came under the boundaries earmarked in the lease document.

In July 2006, the company had announced it was "envisaging development of Bailadila deposit three with an initial capacity of three million tonnes per annum."

However, the Chhattisgarh Government decided to go ahead with the Essar Steel plans and recommended the iron ore reserves for use as captive mine for Essar's proposed greenfield steel plant in the State.

Greenfield steel plant

The Essar group had earlier announced setting up a 3.2-million-tonne greenfield steel plant in Bastar district.

The company intends to set up the plant in two phases of 1.6 million tonne each involving a total investment of around Rs 6,000 crore.

More Stories on : Minerals | Policy | Steel

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