So far, only two companies in India - Tata Steel and Steel Authority of India Ltd - make steel using captive iron ore. This helps them score over other steel makers like Ispat, Essar and JSW Steel.
JSW Steel, which plans to ramp up capacity of its Vijaynagar steel plant to 10 million tonne by 2009 from 4.8 million tonne, will soon be allotted iron ore mines in Karnataka, close to its plant in Vijaynagar, the sources said. The iron ore mines will have a capacity of 500 million tonne and fulfill the companys requirement for the next 30 years.
Moreover, in Jharkhand, the company will set up a 12 million tonne integrated steel plant, which will also be fed from iron ore mines there. The company is hopeful that the Jharkhand government will soon allocate 300 million tonne iron ore mine for which it had applied for. Talking to FE, Sajjan Jindal, vice-chairman and MD of the company said, We have received the prospective license for iron ore mines in Jharkhand. By 2010, we expect 75% of the iron ore to come from our captive resources.
JSW Steel is currently buying iron ore from the spot market at Rs 3,000 per tonne. However, the cost will reduce to Rs 500 per tonne when mined from its captive resources.
For its up coming plant in West Bengal, the company will bring iron ore from Chile where it has recently acquired 8 mining concessions in a greenfield area. Jindal said, We plan to produce 20 million tonne of iron ore in Chile by 2011 with an investment of about $ 500 million. This includes purchase and cost of development. Moreover, we expect to start production in the first phase of 4 million tonne by mid-2009, he added.The company is also in talks to buy three coking coal mines in Australia and one in Canada. It currently has iron ore assets in Chile, coking cole mines in Mozambique and thermal coal mines in Australia and Bolivia.