The battle over Chiria mines

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New Delhi, Dec 9 (UNI) A pitched corporate battle is on between Steel Authority of India Limited (SAIL) and some global steel groups, including Arcelor-Mittal, for allocation of part of Chiria mines, after the Jharkhand government cancelled renewal of lease for part of the mining area.

SAIL is unwilling to part with any mines at Chiria, Asia's largest iron ore deposit, whose lease it had inherited from the Indian Iron and Steel Company Limited (IISCL). Chiria has reserves of over two billion tonnes.

Several global steel groups, including Mr L N Mittal, have evinced interest in being allocated part of Chiria mines.

Intense lobbying is being done by these global giants and SAIL, with the matter having reached the Prime Minister's Office (PMO).

The PMO has been in communication with the Jharkhand government on the issue.

The lease came up for renewal some three decades back. The Jhakhand government, after sitting over the renewal file since the 1970s on various technicalities, suddenly cancelled the lease for Chiria two years back.

It was during this time that several Indian steel makers, including ISPAT Group and ESSAR, evinced interest in the area.

As long as legal proceedings were pending, IISCO had continued to mine in Chiria as it was considered the legal lease holder.

Apart from Arcelor-Mittal, local steel makers displayed interest in the fields.

Mr Mittal has since held meetings with Jharkhand Chief Minister Madhu Koda.

Mittal Group officials have gone on record stating that they were interested in part of Chiria.

Mr Mittal's son too has gone on record suggesting that Chiria be developed as a joint venture with SAIL, a proposal SAIL has not accepted as it feels that it owns the mines and needs it for its own expansion programme.

The lease over Chiria was taken by IISCO when it was under the management of Sir R N Mookherjee, a pioneering industrialist in the pre-independnce period.

The argument advanced by SAIL is that it plans to increase capacity at IISCO plant located at Burnpur, West Bengal, and at its own Bokaro plant in Jharkhand.

SAIL eventually merged the Burnpur-based steel plant, which had become its subsidiary in 1974, into itself. Several abortive attempts have been made in the past to sell IISCO along with Chiria in the global market.

SAIL has since successfully challenged the Jharkhand government's lease cancellation before the Central Mines Tribunal.

After merging IISCO, SAIL unveiled plans of modernising IISCO and developing Chiria.

However, with iron ore prices shooting up several times in the global market, steel majors started eyeing Chiria, which is seen as the last great reserve of high grade iron ore in the world.

The steel PSU also wants to set up a greenfield 12-million-tonne steel plant at Manoharpur, near Chiria. As such it would not be advisable to give up any part of its lease at Chiria, it has argued.

A total of over 32.5 million tonnes of steel making capacity will come at these three locations, requiring SAIL to increase iron ore production at Chiria alone to 25 million tonnes.

The Jharkhand government had earlier asked SAIL to keep with it only as much of Chiria as it would need to feed IISCO and steel plants in Jhrakhand State.

SAIL had earlier planned to take ore mining capacity at Chiria to 7.5 million tonnes at a cost of Rs 1,800 crore or so. It has now indicated it will take ore mining capacity to 15 million tonnes in the first phase and then to 25 million tonnes in the second phase.

Official sources say that SAIL has already started working to expanded capacity at Bokaro Steel Plant to 7.5 million tonnes at a cost of over Rs 8,000 crore in the first phase.

In the second phase another 10 million tonnes of steel making capacity will be added at Bokaro.

SAIL officials argue that Chiria is vital to its plans for growth.

Its raw materials division has set a target of producing 19 million tonnes of ore by the end of the current fiscal. It wants to increase this to 26 million tonnes of iron ore by 2012.

The major chunk of this supply is dependent on the development of Chiria, for which SAIL has prepared the blueprint for a state of the art mining outfit, with beneficiation plants for iron ore and slime.

The issue has assumed political overtones in the area with the local populace coming in support of the Public Sector giant. There is considerable naxalite influence in and around the coveted mines.


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