Non-availability of captive mines of coal and iron ore may affect the expansion plans of Rashtriya Ispat Nigam (RINL).
The government-owned steel manufacturer is planning to raise its capacity to 6.3 million tonne (mt) from 3 mt at present. It also plans to add another 1 mt through modernisation of its existing facilities and another 4 mt in the second phase of its expansion that begins next financial year.
?With such expansion plans, it is important to have our own mines for both coal and iron ore. We are at a disadvantage of R5,000-R10,000 per tonne compared to steel manufacturers which have captive mines,? AP Choudhary, chairman and managing director, RINL, told FE.
RINL has applied for 27 blocks of iron ore mines in six states including Andhra Pradesh, Orissa, Jharkhand, Rajasthan, Chhattisgarh and Uttar Pradesh, for iron ore. The steel ministry has written a letter to the Rajasthan government for allocating an iron ore block to RINL.
?The steel ministry has been proactive in helping us with that. We have had talks with the Rajasthan government and are hopeful that we will get mines soon,? said Choudhary. He also met coal minister Sriprakash Jaiswal for allocation of a coal block in Jharkhand. Choudhary said RINL was surviving due to its techo economic parameters.
?Our energy and water consumption is low, and the converters are more productive than many other private firms. The savings from these may not be huge, but it makes a lot of difference to our accounts,? he said.
The company registered a net profit of R221 crore in the first half of the current fiscal. Choudhary said the profits would have been more had the company had its own mines.
?The selling price of steel is market driven so we can not charge more. Though there are some products where we get some premium, our profitability is low as we have no control over input cost,? he said.
The company has already spent around R9,000 crore on its 3.3 mt expansion plan. It would invest another R6,000-Rs 7,000 crore for further expansion. With the expansion, it would enter into the production of flat products.
?Steel plants should have a mix of products. 77% of our material is special steel. We are going for seamless steel mill that would be 4-5 lakh tonne per year. The project is under consideration of our board,? he said.
