Steel Authority of India Ltd (SAIL) just got a leg-up, with the ministry of environment and forests (MoEF) granting ecology clearance to three leases at Chiria in Jharkhand, Asia’s largest iron ore belt. In a conversation with Ishita Ayan Dutt, chairman C S Verma charts out the development plan for the mines, that have always caught the attention of domestic and foreign steel companies. Edited excerpts:
What does the MoEF nod mean for SAIL in a volatile raw material market?
Iisco was acquired by SAIL in 2005 and Chiria was part and parcel of Iisco. We had applied for a change in name for whatever approval was with the environment ministry (MoEF). Today, our claim has been recognised by the government.
It is not a new mining lease because we had taken on the liabilities of Iisco in toto. Three leases were recommended by the state government for forest clearance and they were lying with the government. In the overall interest of the company and the industry, they have given us approval.
We plan to deploy state-of-the-art mining techniques in Chiria. Today, our iron ore production is about 23 million tonnes, but after the expansion which is going on, our ore requirement will go up to 39-40 mt by 2012-13. By 2020, we plan to take our hot metal capacity to 60 mt. Our ore requirement will then be 100 mt. So, Chiria will come handy. We plan to deploy technology which will not cause any hazard to the environment or the flora and fauna.
Some of the Chiria leases were disputed. What is the status now?
Whatever was recommended by the state government to the ministry has been cleared by MoEF and they constitute more than 50 per cent of Chiria’s reserves. Right now, we will start with only 25 per cent of the mining area.
What are Chiria’s total reserves?
The total is around two billion tonnes. But the mine as a whole comprises many leases. We have been given permission for 1.3 billion tonnes. This are the reserves of the total area (cleared), but we will start mining only in 25 per cent of the area.
When SAIL’s capacity increases to 60 mt, will Chiria meet all the iron ore requirements?
In a steel company, we have to see iron ore requirements for 40-50 years. In the long term, about 50 per cent of the iron ore requirement will come from Chiria. Every mine has a life. So, the old iron ore mines will get depleted over time. In the next 40 years, on a cumulative term, 50-60 per cent will come from Chiria.
What will be SAIL’s total spend on mining?
In the first phase, Rs 5,000 crore will be for development of Chiria. The total spend will be Rs 10,200 crore, of which Chiria will be Rs 5,000 crore.
Over what period of time will it be invested?
The next three-four years. We have already engaged world renowned consultants, Hatch Associates of Australia. They are working on the detailed project report, expected very soon.
But Chiria is infested with Naxals. How do you propose to tackle this?
We have committed to the government that we will be spending a lot on corporate social responsibility (CSR). At least two per cent of net profit will be spent on CSR. We have also committed to spending a significant amount on wildlife and environment programmes. We are slightly affected by Naxals, but I don’t think it will be an issue.
With Chiria, SAIL is sorted out for iron ore, but what about coking coal?
Through International Coal Ventures Ltd (ICVL), we have bid for a number of proposals. On January 24, we signed a memorandum with the government of Indonesia, for which we will be allotted a mine, on a government-to-government basis.
We have given a price bid and are very much in the reckoning. We are also talking to Mongolia, again on a govt-to-govt basis and discussions are on with Mozambique and South Africa as well. So, through ICVL, we will acquire at least one or two mines.
