Ore caught in T tangle

By SNV Sudhir

Visakhapatnam, June 30, 2014: Doubts are being raised over the allotment of Bayyaram iron ore mines, now in Telangana to the Navaratna steelmaker RINL, the corporate entity of Visakhapatanam Steel Plant (VSP) as both the state governments are at loggerheads on various issues ranging from fee reimbursement to power sharing.

Bayyaram mines are very crucial for Vizag steel plant, as it is on an ambitious expansion plan of increasing its production from the present 3mtpa to 6 mtpa at a cost of Rs 12,502 crs and its needs captive iron ore mines.  

At present RINL depends upon supplies by NMDC for its iron ore requirement. RINL has long term agreements with NMDC on iron ore supply. For every tonne of steel capacity, the company needs about 1.5 tonne of iron ore.  RINL’s production cost is 70 per cent compared to 53-54 per cent of SAIL and 35 per cent of TISCO due to lack of captive iron ore mines.

There is no further progress on the allotment of mines to Vizag based, RINL, other than in principal approval by the then state government in the undivided Andhra Pradesh in April last year. 

The then chief minister N Kiran Kumar Reddy allotted iron ore mines to RINL, spread over in an area of 2,500 hectares of land at Guduru, Warangal district, 2,500 hectares at Bayyaram in Khammam , and 342 hectares at Bheemadevarapalli in Karimnagar district.  

RINL, despite being major steel producer in the country and one of the major integrated steel plants is being run without any captive iron ore and coal mines. For Iron ore securitization, RINL has applied for 7 mining leases in Andhra Pradesh starting from 2005.

RINL has also signed a MoU with the state government with a commitment for an investment of Rs. 42,400 crs in the state and with that assurance the state government had agreed to facilitate the allotment of iron ore mines to RINL on priority.

“There is no scientific study taken up by any of the government agencies in these allotted mining areas until now. The exploration of the mining areas can be taken up only after the scientific study, which can’t be done without a prospective license issued by the Telangana government and also various other approvals, NOCs from various central government agencies. For all this there should be a beginning which is giving actual possession of the mining area to us and scientific study. It is being delayed now since more than a year. RINL would also investing around Rs1,000crs for the development of the mines allotted which would create employment for around 1,000 people, both direct and indirect,” said a senior official of RINL.