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No ore, no project: Mittal Steel warns Jharkhand

June 13, 2006 12:02 IST

The Rs 40,000-crore (Rs 400 billion) proposed project of Mittal Steel in Jharkhand could get 'inordinately delayed' if the steel behemoth does not get a written assurance from the Arjun Munda government within the next couple of months on the supply of high-grade ore from the Chiria mines.

"We are hoping that the Chiria mine issue is resolved at the earliest. Work on the detailed project report cannot begin unless the Jharkhand government gives us a guarantee on the long-term supply of ore from these mines," Mittal Steel Jharkhand Pvt Ltd Chief Executive Sanak Mishra told Business Standard.

The Chiria mines, located in the southern part of the state in West Singhbhum district, are India's oldest iron ore mines, having been commissioned way back in 1907.

With estimated reserves of over 2.5 billion tonnes, the mines have become a corporate hotspot with steel companies lining up to obtain a share of the Chiria pie. They are known to have among the highest-grade iron content in the world

From 1947 to 1982, Indian Iron and Steel Company -- now a subsidiary of Steel Authority of India Ltd -- obtained leases for 10 mines in Chiria, of which three were cancelled by the Munda government in January last year with an intention to sign fresh leases with private companies.

SAIL moved the Jharkhand High Court, which stayed the government's move saying that status quo should be maintained. The court is yet to give its final ruling on the issue.

"If we don't get a written commitment from them by August or September this year, there could be an inordinate delay in the project. We have told them that unless there is a guarantee from their side, there will be no investment," said Mishra.

For their proposed 12 million-tonne steel plant -- Mittal's first greenfield project -- the company requires 600 million tonnes of high-grade ore over a period of 30 years and is keen on Chiria for its known reserves. In June last year, technical experts from the company's London office flew down to appraise the quality of iron ore at the mines.

"We are very interested in Chiria because it was promised to us and we expect to get what we need for the project," said the chief executive.

The company has hired the services of Canadian consultants -- the Hatch Group -- to prepare a roadmap for the project, which is expected to be built in two phases. While the initial feasibility report is expected to be out this month, work on the DPR can only begin after the source of ore is determined.

So far, six sites -- Karra Gobindpur, Torpa, Seraikela, Ghatshila, Santhal Pargana and Muri -- have been identified for the greenfield project, of which two will be shortlisted by the end of July.

The global steel major is already in talks with both construction and engineering companies and technology and equipment providers to build a state-of-the-art plant.

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John Satish K in New Delhi
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