JSW Steel to bid for Goa ore to feed Maharashtra unit

Updated: Feb 3 2014, 09:30am hrs
JSW Steel will be bidding for low-quality Goa iron ore for its plant at Dolvi in Maharashtra when the bidding starts next month.

The final announcement for a bidding date can come any day and we plan to bid for it despite it being low-quality ore, said Sheshagiri Rao, joint managing director, JSW Group.

Industry experts had speculated that the company might not bid for the iron ore as it is of very low quality and not suitable for plants in India.

The iron ore available in Goa has an Fe content (purity) of an average of 48%.

Rao said the since it is of low quality, the company is exploring various options to use the ore optimally at the port-based plant in Dolvi, Maharashtra.

We can either beneficiate it in Goa or bring in to the factory and blend it with high-quality iron ore at our Dolvi unit itself depending on which is cheaper, he said.

Beneficiation is a process of improving the quality of iron ore by washing it of impurities such as alumina, silica and phosphorus. This usually leads to a yield loss of up to 50%. For example, a 5-million tonne of 48% Fe grade capacity will reduce to roughly 2.5 million tonne of 60% Fe grade.

For us, the weighted average cost of iron ore at Vijayanagar stands at Rs 3,450 per tonne but at Dolvi it is much expensive as we use very high grade of up to 62-67% Fe at Dolvi. Since we are expecting that the price of the ore in Goa will be lower, we will have to work out the economics to see if it comes out to be cheaper for us to use that after blending or beneficiation, Rao said.

Currently, the 3.3-million tonne per annum Dolvi unit is sourcing ore from Orissa and NMDCs mines in Chhattisgarh and is running the plant at 87% capacity utilisation.

The unit requires up to 6 million tonne per annum of iron ore of a reasonable quality of around 62% Fe grade, a measure of iron ore's purity level.

According to the Goa government, around 15 mtpa of iron ore dumps, in the form if fines and lumps, are lying at the mine heads and ports of the state. The first batch of e-auction is expected to put up almost one lakh tonnes of iron ore for sale with an Fe content of 48% to 52%.