Public sector steel major SAIL would start producing from the Chiria mines in the Naxal-prone Paschimi Singhbhum district of Jharkhand by 2014.
The steel maker is set to finalise an investment roadmap for the project following completion of the detailed project report (DPR) next month.
Chiria, with proven reserves of over 1.8 billion tonne, is one of the largest iron ore mines in Asia. When commissioned, it would help the Maharatna company to more than quadruple its annual production capacity to 60 million tonne (mt) over the next decade.
“We are fully dependent on Chiria for all our future expansions. The mine will be a lifeline for SAIL as reserves in other mines we have been operating deplete. The mine will become operational in the next three years with likely investment of Rs 3,500 crore,” Chairman C S Verma told Business Standard.
SAIL produces 14.5 mt steel annually, accounting for a fifth of India’s overall 60 mt production. The company’s iron ore requirement is set to grow from 25 mt at present to 100 mt by 2020 as production capacity expands to 60 mt over this period.
“More than 40 per cent of the iron ore requirement of 100 mt would be met from Chiria,” Verma said.
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The company had appointed Hatch Associates of Australia as consultant for preparing Chiria’s project report, which would be submitted soon. It plans to develop the mine with an initial capacity of seven million tonnes per annum (mtpa), to be subsequently expanded to 15 mtpa in the coming years, the company informed in an email response to a questionnaire by this paper.
While environment clearance for the mine was already in place, the environment ministry accorded the forest clearance to the BSE-listed company earlier this year. Jairam Ramesh, the then environment minister, had in February overturned the recommendation of the Forest Advisory Committee (FAC) and had approved the forest clearance for Chiria.
Ramesh had defended his decision on nine grounds, including SAIL’s awaited public offer of Rs 18,000 crore and the company’s “good” track record in corporate social responsibility (CSR). He had, however, attached 13 riders, including commitment of a Rs 20-crore investment in improving wildlife and earmarking two per cent of its net profit towards CSR in the region.
Asked how the riders would would impact development of Chiria, Verma said, “We are already complying with these conditions. In fact, what we are doing is much more than the mandatory requirement of CSR.”
SAIL has planned to develop the entire mining allied infrastructure of Chiria at non-forest land in Patherbasa, 15 km away from the actual mining site, another of Ramesh’s conditions.
Preliminary investigation work for land acquisition is being done at Manoharpur in five proposed acquired villages, the company informed.
The Chiria iron ore mining complex located in Saranda forest, originally belonged to the erstwhile Indian Iron and Steel Company (IISCO). IISCO merged with SAIL in 2006 on the premise that the mines would be made available to SAIL since it had been forced to absorb substantial losses on IISCO’s account. The entire Chiria complex is spread over 2,376 hectares. SAIL has been permitted to divert 25 per cent of the area – 595 hectares – for 20 years.
SAIL recorded a net profit of Rs 4,881 crore over a marginal four per cent rise in total income at Rs 44,858 crore last year (2010-11). Its share price at the Bombay Stock exchange closed on Tuesday at Rs 107.9, up 0.9 per cent as compared to yesterday’s close.