The Hindu : Business : RINL keen on captive coal, iron ore mining

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Wednesday, Nov 15, 2006
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RINL keen on captive coal, iron ore mining

Special Correspondent

KOLKATA: Even as it lines up an estimated Rs. 25,000 crore expansion plan, Rashtriya Ispat Nigam Ltd (RINL) has embarked on a programme to begin captive mining of coal and iron ore in India and abroad.

Addressing a press conference here on Tuesday, RINL Chairman-cum-Managing Director, Y. Siva Sagar Rao, said captive mining was the need of the hour for the plant's raw material security. RINL, which owns the Vizag Steel Plant (VSP), spends Rs. 2,100 crore annually to meet its requirement of two crucial feeds — coking coal and iron ore.

Overseas interest

For coking coal, VSP is eyeing mines in Australia, Canada, South America, Russia and Poland for a joint venture, while for iron ore it is looking at Brazil and South Africa for either acquisition or joint venture.

Alongside, within India, it is trying to get mining leases in Orissa and Chhattisgarh for iron ore and in Andhra Pradesh for boiler coal and limestone. In Oman, it is examining the scope for acquiring limestone mines. Mr. Rao had already visited some of the overseas countries for negotiations.

Pelletisation plant

He said that given its handicap on the raw materials front, VSP spent 49 per cent of its turnover in the first half of 2006-07 while its competitors spent between 18 per cent and 32 per cent. VSP was also considering the setting up of an iron ore pelletisation plant in Chhattisgarh with equity participation by National Mineral Development Corporation (NMDC). This was expected to reduce the cost outgo on account of using iron ore lumps, which NMDC sells to VSP at international prices, leaving it vulnerable to international price fluctuations.

Turning to the company's expansion plans, he said investment of an estimated Rs. 25,000 crore was needed to increase the capacity from 3.6 million tonnes to 16 million tonnes by 2020. The first phase, which has been approved by the VSP board, will take the capacity to 6.3 million tonnes by 2008-09 at an investment of Rs. 8,692 crore. This will be raised through a mix of equity and debt in equal measure.

Mr. Rao also disclosed that VSP was keen to set up a special economic zone (SEZ) in the Vizag-Kakinada corridor, close to the existing plant for setting up downstream steel units making auto components and forgings. This would provide a ready market after VSP's expansion.

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