A big breather has come for the Steel Authority of India Limited (SAIL) as the Chhattisgarh government has decided to give its iron ore mine in Kabeerdham district to the company to cater to the raw material demand for its flagship entity, Bhilai Steel Plant (BSP).
BSP that earns highest profit for the SAIL had been reeling under crises for the raw material as the deposit in its Dallirajhara captive mine is fast depleting. While the plant is on an expansion plan to enhance its capacity from 3 million tonnes per annum (MTPA) to 7 MTPA. But the company does not have sufficient stock of iron ore.
The deposit in Dallirajhara would exhaust in three to four years while the Rowghat mines allotted to the company had hit the Naxal roadblock. The rebels who have considerable hold in the area have threatened the company of dire consequences if it tries to develop the Rowghat mines. Even if the work starts now, it will take time to develop the mine.
The state government has however decided to give respite to the SAIL by joining hands with the state-run steel major to form a Joint Venture and develop the Eklama iron ore mine located in Kabeerdham district. The state government and the SAIL inked a memorandum of understanding (MoU) for the same during the two-day global investors meet that concluded on Saturday. “The MoU would be a milestone for the state’s economy and BSP’s survival,” chief minister Raman Singh said. The CMDC would have a 51 per cent stake in the JV while SAIL would hold 49 per cent equity. A Special Purpose Vehicle (SPV) would be formed for mining iron ore. The mine located in some 1909 hectares of area is estimated to have a reserve of 70 million tonnes of iron ore. The composition, structure and other terms of the JV shall be decided by the two parties within a period of 30 days from signing of the MoU and shall be submitted for the approval of the respective Boards.
The MoU also states that SAIL shall undertake establishment of ore processing plant, ore beneficiation plant and ore pelletisation plant.
During the two-day global investors meet that concluded Saturday evening, MoUs worth more than Rs 122419 crore had been signed with 300 companies to generate direct and indirect employment for more than 620,000 people.
“All the investments are in the downstream sector as the state government focused only on non-core industries in its first global investors’ meet,” Singh said.