Clearance for remaining five mines soon; co source says will operationalise three mines this fiscal.
Orissa Minerals Development Company (OMDC), a public sector enterprise with iron reserves of up to 206 million tonne, gets a much needed shot in the arm from the ministry of environment and forests (MoEF).
One of the most prospective mines of the company — the Kolha-Roida iron ore mine — has received an environmental clearance from MoEF and can now start operations, paving the way for the company to get into the big league of iron ore miners in the country such as NMDC Ltd and Sesa Goa.
“We have got a nod from the ministry on June 21 and can now go ahead and finalise the contractor for the mine. We have already awarded a Letter of Intent to a bidder and now the proposal will be taken to the board,” said a high-ranking company source.
The source said the company will now apply to the state for mining approval which is expected in a month’s time. By that time, a contractor to mine the ore from the lease area will also be finalised.
OMDC is a subsidiary of Rashtriya Ispat Nigam Ltd and comes under the Ministry of Steel. It has a total of six mines spread over 4,365.262 hectares in Barbil, district Keonjhar.
Apart from prolific reserves of iron ore in mineral rich Orissa, the mines are also reported to have manganese reserves of up to 44 million tonne.
In spite of access to rich iron ore reserves, the company had not been able to reach an optimum level of production, since operations in all its mines gradually came to a grinding halt due to expiry of forest and environment approvals. It has been producing minimal iron ore for the last two years.
“The future for our mines look bright, as after Kolha-Roida we are expecting approval for Bhadrasai mine too. In fact, the approvals for all the remaining five mines are expecting to be with us very soon,” the company source said.
He said by the end of the current year the company is planning to have three of its mines operational and clock a revenue of Rs300 crore.
“This is a promising figure as Rs300 crore of turnover will be only for a period of six months. Therefore, next fiscal, the company is expected to be much better,” said an analyst with a leading portfolio management company under condition of anonymity.
He said with current iron ore prices, for a Rs300 crore revenue, the company is expected to register an Ebidta (earnings before interest, depreciation, tax and amortisation—or operating profit) of 70% and profit after tax tax of 55%.
In January, OMDC had invited bids from prospective contractors to mine and transport iron ore from its Kolha-Roida mine, which is spread across an area of approximately 255 hectares, and is the fourth biggest mine that the company has in its portfolio in terms of area covered. Big mining and infrastructure firms including Sesa Goa, had shown interest in the mine.
According to OMDC’s tender document, the contractors will be appointed for five years, with a target to achieve 1.3 million tonne per annum (mtpa) in the first year.
Thereafter, in the second year, it will be have to reach 1.8 mtpa, then 2.5 mtpa for the third year and finally 3 mtpa for the next two years.
Satish Chandra, chairman and MD, said in September he plans to increase iron ore production to 10 million tonne per annum and manganese ore to 2 million tonne by 2014-15.
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