The Hindu Business Line : Rashtriya Ispat chalks out plan to source iron ore

Proposals mooted
Obtaining mining leases in iron ore-rich States.
Participating in the development of Chiria mines with SAIL.
Entering into joint ventures for exploration and exploitation of iron ore deposits.
Acquisition of ore mines in Brazil and South Africa and other African countries.

Kolkata , Nov. 14

Rashtriya Ispat Nigam Ltd (RINL), the holding company of Visakhapatnam Steel Plant, is working on a multi-pronged strategy to overcome the present problem of sourcing iron ore.

The strategy, according to Mr Y. Siva Sagar Rao, Chairman-cum-Managing Director of RINL, who was speaking to presspersons here on Monday, presupposes obtaining mining leases in iron ore-rich States such as Orissa, Jharkhand and Chhattisgarh, participating in the development of Chiria mines with Steel Authority of India Ltd (SAIL), entering into joint ventures with National Mineral Development Corporation (NMDC), Kudremukh Iron Ore Company, Orissa Mineral Development Corporation, MMTC and SAIL for exploration and exploitation of iron ore deposits and setting up pellet plants and DRI units, acquisition of ore mines in Brazil and South Africa and other African countries and exploring imports.

Since the iron ore rich-States are more keen on value-addition in the form of launching steel plants than outright sale of the mineral, Mr Rao felt that RINL might be forced to consider setting up units in these States to have an assured supply of the ore.

"But then green-field projects mean huge investments while the same additional capacity can be created at a much less cost in brown-field expansion," he said.

As Mr Rao said, the problem relating to iron ore sourcing arose because RINL, unlike other steel plants, did not have captive iron ore mines. It has to depend on NMDC, which charged international prices and the fluctuations in international prices hit the company's bottomline.

Besides, in the past four years, NMDC's iron ore prices tripled - from Rs 385 per tonne in 2002-03 to Rs 1,517 in 2006-07. As a result, the landed cost of iron ore used by RINL was Rs 2,210 per tonne, three times as much the price paid by its competitors. Mr Rao, however, made it clear that NMDC would continue to be the major supplier of ore to RINL.

The company also had problem in sourcing coking coal. Almost the entire requirement was met by way of imports. RINL, according to its CMD, therefore, is mulling joint ventures in coking coal mining in Australia, Canada, South America, Russia and Poland and has appointed a consultant to suggest how to go about it. There are also other proposals for consideration such as floating joint ventures with SAIL, Coal Videsh and National Thermal Power Corporation, entering into 10-year purchase agreement replacing the present three-year one with the existing major coal suppliers, development of captive mines, acquisition of mines at Khammam in Andhra Pradesh for boiler coal and import of low ash content boiler coal.

The company, as it was indicated, also proposes to launch a joint venture with Manganese Ore India Ltd for the manufacture of ferro manganese and silico manganese and examining the scope for importing limestone from Oman. "We're in fact working on all fronts to achieve the raw material security," Mr Rao said.

The work on phase I expansion, to achieve a capacity of 6.8 mt by 2008-09, is in progress. "All the infrastructure work will be over soon and orders for main process packages worth about Rs 5,000 crore will be placed by December," he said. The Phase I expansion would cost Rs 9,192 crore.

In the first half of the current fiscal, RINL's sales at Rs 3,883 crore registered a growth of four per cent over the same period of last year, exports at Rs 211 crore an impressive growth of 52 per cent and the sale of 1.43 million tonnes of steel, a growth of nine per cent.

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