The government is considering allowing SAIL to sell excess iron ore in the open market to make it available to small steel producers. A top steel ministry official told FE the ministry would soon seek cabinet clearance in this regard.
He said the ordinance has paved the way for introduction of competitive bidding for allocation of iron ore mines. This would enable only large players to bag iron ore mines, while steel players in the government sector would continue to hold leases and if required would get new mines via the allocation route.
Small steelmaking units are already suffering from lack of iron ore and major iron ore blocks would get concentrated with large players. “Under such circumstances if mine owners are not allowed to sell iron ore in the open domestic market, the crisis of iron ore for small players will not be sorted out. But before allowing the iron ore owners, who have bagged mines via the auction route, to sell iron ore in the open domestic market, the government is mulling allowing SAIL to sell excess iron ore production in the open domestic market,” the official said, adding that the government wants to create a level playing field for all iron ore mine owners both in the public and private sectors.
Union steel and mines minister Narendra Singh Tomar said: “Reforms in the iron ore mining sector are required to kickstart the sector by removing bottlenecks that are preventing the industry from becoming a growth multiplier.”
He said that if all players, willing to hold iron ore mines, have to get them through the auction route; there should be some mechanism through which small players can source iron ore.
According to SAIL estimates, its captive mines after expansion would be able to produce more than 50 million tonne per annum (mtpa) from a level of 28 mtpa at present. Its requirement, in sync with the expansion of steelmaking capacity, would be 43 mt.
SAIL would increase production of its Kiriburu mines to 5.5 mtpa from 4.25 mtpa. It is also jacking up production of Meghataburu and Bolani mines to 6.5 mtpa and 10 mtpa, from 4.3 mtpa and 4.1 mtpa, respectively. SAIL is increasing its Gua mine’s production to 10 mtpa from 2.4 mtpa at present and expanding capacity of its Barsua, Kalta and Taldih mines to 6.5 mtpa from 3.3 mtpa. The major boost in iron ore production might come from the Rowghat mine, where the company wants to produce 12 mtpa iron ore. It would also raise production at its Chiria mine to 7.45 mtpa from 1.5 mtpa at present.
While production in excess of requirement should go to the small players, it would also fetch higher return on investment, the official said. SAIL is investing more than Rs 10,000 crore in expansion of mines.