The Jharkhand govt and SAIL have a running battle going over Chiria, where SAIL mines just two of the total seven blocks.
To develop Chiria reserve, which Jharkhand wants to give to other firms.
KOLKATA: The Mittal effect has started showing in the Indian steel industry. Close on the heels of the Tatas deciding to increase stake in Tata Steel through a preferential issue, it is now the turn of the country’s largest steel producer, Steel Authority of India Ltd (SAIL) to ring-fence its most prized possession — iron ore reserves.
While there is possibility of it becoming a target of acquisition, the government-controlled SAIL is moving fast to strengthen its stranglehold over one of the world’s richest iron ore reserves - Chiria in Jharkhand, where Mittal Steel has signed up to put up a 10 million tonne (MT) greenfield steel plant. SAIL has announced a Rs 1,800-crore project to develop the 1,400 MT of reserves at Chiria, supplies from which are crucial for the Rs 8,000-crore expansion of its Bokaro Steel Plant to ramp up production to 7 MT from 4 MT at present. By hastening the project to develop Chiria mines, SAIL is indirectly squeezing the options of Mittal Steel from securing lease of the best mining stretch from the Jharkhand government.
In fact, the Jharkhand government and SAIL have a running battle going over Chiria, where SAIL currently manually mines just two of the total seven blocks to produce 0.5 MT of ore.
The Jharkhand government had a couple of years ago cancelled SAIL’s mining lease for three of the Chiria blocks and the issue moved to the courts.
A tribunal set up to settle the issue ruled in favour of SAIL, putting a spanner in the state government’s plans to hand over mining lease of Chiria to companies like Mittal Steel that were planning new steel plants in Jharkhand.
The matter was lying dormant until Lakshmi Niwas Mittal clinched the merger deal with Arcelor and putting Arcelor Mittal footprint on Asia became his priority. Not one to let go of an opportunity to woo Mittal Steel, the Jharkhand government has taken a quick decision to appeal against the tribunal order in favour of SAIL before the Ranchi High Court. In a counter move, SAIL has decided to expedite development of Chiria mines, to covertly deny access to the best of raw materials to its competitors.
Denying that development of Chiria has anything to do with the creation of Arcelor Mittal or Mittal Steel’s Jharkhand project, senior SAIL officials said, “Investment in Chiria is part of the SAIL Corporate Plan 2012. Supplies to Bokaro from Kiriburu-Meghahataburu mines (also in Jharkhand) will be insufficient for Bokaro’s 7 million tonne expansion. If 30-year supplies of ore is to be assured for Bokaro, it is imperative that new blocks in Chiria are developed.”
The Rs 1,800-crore investments for Chiria will be for increasing production through mechanised mining to 7 MT in the first phase and thereafter to 15 MT per annum depending on the requirement of SAIL’s IISCO plant and Rourkela Steel Plant.
“Unless lease renewal and forestry clearances are immediately given for the development of Chiria mines, expansion of Bokaro Steel Plant and in fact implementation of SAIL Corporate Plan 2012 will be affected. Interest of domestic steel companies will have to be ensured by the government,” SAIL officials said, hinting that giving mining lease of the best reserves to new players would be strongly resisted.
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