Tatas, Essar get nod to prospect ore

Domestic steel giants Tatas and Essar have received the Centre's nod to prospect more than 250 million tonnes of iron ore in Bailadila mines, in Chhattisgarh, for their proposed steel projects with a total capacity of eight million tonnes.

"The Centre has accorded its approval to allow us to prospect Bailadila-III deposit in Chhattisgarh. We are awaiting forest clearance from the government and will commence work only after receiving it," Essar Steel Holdings CEO J Mehra said.

Prospecting would be done on more than 2,000 acres of land and it is expected that the deposit has about 150 million tonnes of iron ore. "We will complete prospecting within six months after we began the work."

Essar Steel had signed an MoU with the Chhattisgarh government to set up a 3.2 million integrated steel plant at an estimated cost of Rs 7,000 crore, Mehra said.

The licence given to Essar was earlier held by National Mineral Development Corporation, but the state-run reportedly lost this in February last as it had not excavated the mines. Similarly, Tata Steel has also received the government's nod for prospecting the Bailadila-I deposit that has an estimated reserve of up to 150 million tonnes.

A Tata Steel spokesman confirmed the development and said prospecting would begin in due course of time. Tata Steel plans to build a 5 million tonne steel plant at Bastar in Chhattisgarh at an estimated investment of about Rs 10,000 crore.

The Bailadila region, which is fragmented into 14 deposits, has large reserves of high quality iron ore. Almost all leading steel producers are vying to have a share from its deposits. With the demand for iron ore being at an all-time high, steel makers have intensified efforts to secure captive mines for their plants.

However, there seems to be no immediate possibility of their desire being fructified as the government is yet to take a formal decision on the issue.

Chhattisgarh's mineral-rich neighbour Jharkhand too has roped in some big companies in the steel sector with Arcelor Mittal pledging to invest Rs 40,000 crore to build a 10 MT greenfield project, but has demanded a slice from the famous Chiria mines.

Chiria's major claimant IISCO steel plant, which is now a part of state-run SAIL, has approached the Jharkhand High Court after the state government cancelled the lease allocated to it for extracting ore from the mines.

Sources in the Steel Ministry said that the government is actively exploring the possibility of an out-of-court settlement on the issue, but an immediate resolution of the matter is nowhere in sight.

The government has envisaged steel production of about 20 million tonnes by 2025 if all the promised expansions fructified, but the Indian Steel Alliance has said that unless permanent linkage of iron ore was ensured to the steel makers capacity expansions cannot materialise on the ground. The Group of Ministers has finalised its recommendations on the mineral policy and the matter has been referred to the union cabinet for further approval.