After bidding aggressively for mines, Sajjan Jindal-owned JSW Steel is now keen to surrender one of the four mines in Odisha due to delay in getting cost overrun.

JSW Steel has written a letter to the Government for giving back the lease of Jajang Iron Ore Block at Keonjhar district. The mine has a reserve of about 55 million tonnes.

The mine, one of the largest iron ore mines in Odisha, was won by JSW Steel by beating its competitors Adani, JSPL, Rungta Mines, Serajuddin & Co, Lal Traders and Eastern Mining in 2020.

It became the preferred bidder by committing a premium of 110 per cent of average monthly iron ore price published by the Indian Bureau of Mines in Odisha.

The beneficiated iron ore from the mine was to be transported through a 300 km slurry pipeline from to Jatadhar, Paradip.

The steelmaker had written to the state government two years ago for surrendering the mine, but changed its mind after a subsequent auctions fetched high premiums again, said sources.

The company had acquired four iron Ore Mining leases in Odisha through auction in 2020. Due to un-economic operation, the company has submitted a notice for surrender of the mining lease on September 1 as per applicable laws in respect of Jajang Iron Ore Block, said the company in a statement.

Jayant Acharya, Joint Managing Director, JSW Steel had said the company currently gets 45 per cent of the iron ore requirement through captive sourcing through 13 operating mines and expects to add 7 mines soon.

“Ideally, we would like to have at least 75 per cent of iron ore raw material integration,” he said in an interview with business line.

Earlier, JSW Steel could not succeed in its attempts to reduce the minimum despatch condition of 12 mtpa to 1 mtpa, said sources.

Before being auctioned the mine was operated by Rungta with an annual capacity of 12 mtpa and has only pockets of high-grade reserves left, it added.

Half of the material that the steelmaker could still use lies in an area marked as ‘Sabik’ forest. While the recent amendments to the Forest Conservation Act could facilitate access to these reserves, the company is already reeling under the steep cost of operations given Jajang’s high premium and minimum dispatch and production agreement, he added.