Steel Authority of India Ltd (SAIL) is set to pick up a 40% stake in the proposed 4 million tonne steel plant in Chhattisgarh through a joint venture with the National Mineral Development Corp (NMDC) and Rashtriya Ispat Nigam Ltd (RINL). At 40%, SAIL?s exposure is likely to be Rs 6,400 crore.
Though a three-way memorandum of understanding was signed between SAIL chairman SK Roongta, RINL chairman Siva Sagar Rao and NMDC head B Ramesh Kumar on April 26 to set up the unit, the share of the investment by each of them was not agreed upon
?We have decided to restrict our equity exposure in the Rs 16,000-crore project to 30%, giving SAIL the majority control. In the final scheme of things, NMDC and RINL will hold 30% each, while SAIL will have the control with 40% stake,? NMDC chairman-cum-managing director B Ramesh Kumar said.
According to Ramesh, NMDC has taken the decision to venture into steel making because of the Chhattisgarh government?s insistence on local value addition in some of the new mines being developed by the company.
In Chhattisgarh, NMDC, which currently operates two mines, is now working on two more? block 11B and block 13. The infamous mine, 11B, has been lying idle since 2002 following an aborted attempt by the government to transfer the mine to a joint venture, in which the Pramod Mittal group and its associate Nippon Denro Ispat Ltd had a majority stake of 89% equity.
?We have started work on the mine 11B, and will be spending close to Rs 300 crore in developing it further. Full-fledged production would begin after two-and-a-half years, probably making it the first iron ore mine to be commissioned in the country after a gap of several years,? Ramesh said. The next mine to start commercial production will be block 13, which has a reserve of 340 million tonne. ?A MoU with the state government has only been signed and the environmental clearance is awaited,? he added.
NMDC?s efforts to develop new mines could face a severe jolt because of the maoist violence. Its mining operations can get severely affected if the issue is not tackled head-on.
NMDC has increased patrolling by CISF personnel, but the ?ground situation is getting very serious as the Maoists are launching attacks at their will,? he said.