SAIL’s Visesvaraya Iron and Steel Ltd (SAIL-VISL) unit has not been able to start mining iron ore in Karnataka for more than two years due to a tangle with the state government over the allotted area.

A 140 hectare area in the NEB range of Bellary district in Karnataka was given to SAIL-VISL for undertaking prospecting or mining operation to SAIL’s loss-making unit for 20 years in October, 2011.

Earlier in 2013, while conducting a survey for processing the proposal for granting the mining lease, it was found that there was an overlap of about 13-14 hectares with neighbouring areas.

“Deputy Director, DMG, Hospet in its report said that as per the applied sketches of SAIL-VISL; adjoining applicants P M Mines and Minerals and B Rudra Gowda; the area available for allocation to SAIL-VISL comes to 126.951 hectares without causing any overlap,” SAIL said in a recent communication to Steel Ministry.

SAIL-VISL subsequently wrote to the Karnataka government to reserve 126.951 hectare area for mining operations. It also took up the matter with the Ministry of Mines.

However, in July this year, Karnataka’s Mines Department forwarded a recommendation for 88.26 hectares of area in favour of SAIL-VISL to state’s Commerce & Industry Secretary to issue a corrigendum notification.

SAIL-VISL then requested various authorities in the Centre and state to review the matter “in the interest of justice and survival of the oldest steel manufacturing plant in Karnataka.”

“In the absence of the corrigendum as requested, only an area of about 88 hectares is available out of which about 50 hectares is non-mineralised,” SAIL said.

The total mineral reserve expected in the area is grossly inadequate for continued operations of SAIL-VISL, which is already starving due to non-availability of iron ore, it added.

The plant has been suffering losses for quite some time now. It had suffered a net loss of Rs 116 crore in 2012-13, nearly Rs 130 crore in 2011-12, Rs 129 crore in 2010-11 and Rs 100 crore in 2009-10.

This is primarily because of SAIL-VISL’s high production cost owing to the lack of linkages of iron ore and coal as well as inefficient technology. The sales performance of the unit materials has also declined during the first six months of this financial year.

Meanwhile, SAIL has invited Expression of Interest (EOI) from interested parties willing to enter into a joint venture with for manufacturing of steel and related products at VISP, Bhadravati.

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