Steel Authority of India Ltd has decided to outsource development of two huge virgin iron ore mines at Rowghat in Chhatisgarh and Chiria in Jharkhand, a company official has said.

“Rowghat – which will have a capacity of 14 million tonnes (mt) per annum and Chiria – 15 mt are crucial for SAIL’s capacity expansion,” SAIL’s Director (raw materials & logistics) A.K. Pandey said.

“We have decided to develop these two mines through mine developer-cum-operators. We hope to get a good response in this route, being tried for the first time by the company,” he said.

It would cost Rs 1,000-1,200 crore each for developing Rowghat and Chiria mines, he said, adding that if this method is successful, SAIL’s investment for mine development would be reduced by around Rs 2,500 crore.

The public sector steel major has earmarked an investment of Rs 15,000 crore for the expansion of existing mines and developing virgin mines.

Stating that this concept is taken from Australia, he said in this route, the company would have long-term contracts with those who would develop and operate the mines. They would make the investment and charge SAIL on per tonne basis, he said.

This concept would be first implemented in Rowghat, where the contractor’s responsibility would be to develop the mine, get iron ore, crush it and load it. After that it would be SAIL’s responsibility to take the iron ore to its facility at Dalli-Rajhara, 95 km away, for processing.

SAIL, which would increase its capacity to around 24 mt by the end of next year from the existing 14 mt, would require 39 mt of iron ore by the end of 2013.

He said that the global tender would be floated for this within a month and hoped to get a good response.

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