JSW Steel eyes mining leases in Karnataka post SC judgement

JSW Steel is looking to secure mining leases, including bidding for new mines, in Karnataka after last week's Supreme Court judgement lifting the mining ban in the state.

"The category-C mines are going to be auctioned. So we are awaiting that... We will definitely apply (for new mining leases) and we expect that we get the mines as and when the process gets started," JSW Steel Chairman Sajjan Jindal said here on the sidelines of a conference organised by The Economist.

"Without mines we have suffered a lot and today we don't have any mines. Still we get blamed as if we are a mining company. So, we have decided not to put any money in expansion unless we have captive mines," he said.

JSW Steel, the largest domestic steel maker in private sector, does not have any captive iron ore mines though it has 14-million tonnes production capacity. This includes a 10-MT capacity in Karnataka's Vijayanagar.

Besides Vijayanagar, it has 1 MT plant in Tamil Nadu's Salem. Rest 3 MT capacity is produced by JSW Ispat -- its associated firm, which is under process of merger.

Meanwhile, the company has put on hold the expansion of its 10 million tonnes (MT) steel plant in Karnataka due to continuous shortages of iron ore in the region.

"Not (expanding) in Karnataka anymore. Unless we get mines, it will be very difficult for us to take a decision on that. Without mines we are not going to expand," Jindal said.

The company had earlier announced plans to expand its 10 MT Vijayanagar capacity in Karnataka by a further 2 MT for about Rs 2,695 crore. The expansion was proposed to be completed in 2013-14.

The company had plans to fund the expansion by taking a debt of Rs 1,750 crore and meeting rest of the investments, about Rs 945 crore, from its cash reserves.

However, due to continuous shortages of iron ore for more than one and half years, JSW has been running the Vijayanagar plant at a reduced capacity of 80-85 per cent. The shortages of ore has led to expansion being put on hold.

For the current fiscal, JSW is looking at 85 per cent capacity utilisation of its plant and is hopeful of improvement in iron ore availability situation with around 22-23 MT supply in near future, he said.

The Supreme Court, in its judgement, had lifted the mining ban in Karnataka. While it allowed mining in Category-A and -B mines, it ordered cancellation of 49 category C mine leases and directed to auction them.

The three categories were made to determine the illegalities at the mines. Mines with least or no illegality were in Category-A, while mines with most illegalities were in Category-C.