By SNV Sudhir
Visakhapatnam, April 19, 2013: While allotment of 5,342 hectares of iron ore mines across Khammam,
and Karimnagar districts to public sector RINL invited the wrath of Telangana
protagonists, the state government’s decision didn’t enthuse anyone back home.
Though there was no full fledged scientific study into the mines allotted, preliminary studies by the mines department indicated that the iron ore available there was of a very low grade and will not help much in steel production at the Visakhapatnam Steel Plant (VSP).
The expansion of the production at VSP from the present 3.3 tonnes to 6.3 tonnes is at an advanced stage of completion. The expansion was taken up at an estimated cost of `12,500 crore.
The state government has in principle allotted around 2,500 hectares at Bayyaram in Khammam, 2,500 hectares at Guduru in
Warangal, and 342 hectares at Bheemadevapuram
in Karimnagar districts.
The raw material will also exhaust within six years as the iron ore available in all the three mines put together is estimated to be 32,000 million tonnes. VSP needs at least 20,000 tonnes of iron ore per day if the expansion is completed for the production.
At present, RINL depends on supplies by NMDC for its iron ore requirement. RINL has long-term agreements with NMDC on iron ore supply. RINL’s production cost is 70 per cent compared to 5354 per cent of SAIL and 35 per cent of TISCO due to lack of captive iron ore mines.
Trade unions also raised red flag at the RINL’s agreement with the state government on setting up of 1MT capacity steel plant at Khammam.
“It will cost an approximate 6,000 to 7,000 cr to set up a steel plant with 1 MT capacity whereas the present the establishments needed to increase its production capacity to 20mt in future is already available at VSP. We wonder what is the necessity for the RINL to accept such a proposal and that too for such a low quality iron ore which will not be useful in producing quality steel,” Vizag steel recognized trade union president, D Adinarayana told this correspondent.
He said instead Obulapuram mines in Anantapur district could be allotted which has better quality of iron ore. RINL recorded a turnover of Rs.13, 650 crore during 2012-13 as against previous year’s Rs.14, 426 crore.
However RINL CMD, AP Chaudhary said that the exploration of the mining areas will be taken up shortly by the company to assess the quantity and quality of iron ore available in the allotted area.
RINL would be investing around Rs1,000 crores for the development of the mines allotted which would create employment for around 1,000 people, both direct and indirect, he added.