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Thursday, October 6, 2011

SAIL's Visvesvaraya steel plant to get captive iron ore mine

Thu,6 Oct,2011
By Meera Mohanty,ET Bureau

NEW DELHI The mines ministry will soon allot an iron ore lease in Karnataka's Bellary district to SAIL's Visvesvaraya Iron and Steel Ltd (VISL) plant, ending the company's sevenyear-long wait for a captive mine. The 140-hecatre area, in the North East Block range in Sandur, could contain about 11 million tonnes of iron ore, said people familiar with the exploration work.

Located at Bhadravathi, the loss-making VISL is struggling to meet its requirement of 5 lakh tonnes of iron ore. The raw material that it sources from NMDC works out to Rs 5,000 a tonne. Getting supplies from SAIL's mines in Jharkhand, more than 2,500 km away, is also not a viable option as freight cost alone would add up to Rs 2,800 a tonne.

Sales of VISL, whose clients include major automakers, the defence ministry and the Indian Railways, remained nearly flat at Rs 553 crore and losses before tax amounted to Rs 129.92 crore during the last fiscal. The special alloy and forged steel plant is currently operating at around 50% of its capacity of just under 2.3 lakh tonnes of hot metal, according to the company. SAIL has maintained that any capacity expansion could only commence after the allocation of a mine.

Founded 90 years ago, VISL was dependent on the Kemmangundi mines, a part of which fell under the Bhadra Wildlife Sanctuary where mining was banned. Ironically, VISL will be auctioning about 100,000 tonnes of iron ore fines from its stockpile of an estimated 1.7 million tonnes at Kemmangundi. At the time of the ban, the Supreme Court had directed that this 1 lakh tonnes either be immediately used or auctioned.

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