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Vedanta Group firm Sesa Sterlite is unlikely to meet the target of first shipment of iron ore from its Liberian mines by March this year due to logistics issues.
The company has maintained for long that it was on track to meet the target of first shipment from the project, known as Western Cluster Ltd (WCL) project, by March.
Accordingly, it was aiming to complete the first phase of mining, having 2 million tonnes (MT) capacity, by December 2014.
However, industry sources said the company is facing issues in developing logistics for the project, which is 76 km away from the Monrovia port and some clearances from the local government are still awaited.
Due to this, the pace of development of the project has slowed down and the company will be missing its first shipment target, they said, adding that new targets will depend on having a clarity on evacuation corridor for the mined iron ore from the West African government.
When asked, Sesa Sterlite's Executive Director (Iron Ore Business) P K Mukherjee said: "We are continuously engaged with the Liberian government on this."
He, however, declined to comment further.
The company has so far spent about $220 million on the project, which includes acquisition cost of $123 million. On exploration, it has incurred expense of $35 million so far.
In July last year, the company (then known as Sesa Goa) had said that it planned to invest up to USD 400 million on the project in 2-3 years.
An analyst said that cash crunch faced by the iron ore business of Sesa Sterlite is also a reason for the company going slow with the WCL project.
While Sesa's mining operations in Karnataka have started recently, Goa business is still closed due to continuation of the mining ban. All of this has led to restricted cash flow for the iron ore business of Sesa Sterlite, the analyst said.
As per the original development plan of WCL, the saleable iron ore was initially proposed to be transported to the Monrovia port by road from the mine and subsequently, it was to be replaced by rail transport. Construction of the railway line was part of integrated development plan for the project.
Accordingly, the company was looking to develop logistics capacity of 20 MT for evacuation of iron ore from the mines.
The WCL project was acquired by Sesa Goa, the earlier avatar of Sesa Sterlite in two phases. The project has 3 major iron ore deposits at the Bomi Hills, Bea Mountain and Mano River and all of them are located at a distance of 76 to 140 km from the port.
The company has so far announced certified reserves of 1 billion tonnes and rough estimates suggest that the reserves could be as high as 3 billion tonnes. The company was earlier targeting to have up to 30 million tonnes production capacity in next 5-6 years, subject to market conditions.
