SAIL and NMDC should surrender undeveloped iron ore blocks: Experts

MUMBAI | KOLKATA: State-owned companies like SAIL and National Mineral Development Corporation should surrender undeveloped iron ore blocks to fulfil the recently approved National Mineral Policy's objective of “rationalising reserved areas” held by PSUs and releasing them for auctions for private participation, experts said.

This will reduce the country's dependence on imports of iron ore, the prices of which have been volatile in the last few months, even as the country harbours a vision to achieve 300 million tonnes of steel production by 2030, which will require about 500 mt of iron ore. It takes about 1.6 mt of iron ore to produce 1 mt of steel.

“PSUs need to have a clear longterm plan of action about their requirements since their expansion plans are linked to their reserves,” a steel ministry official told ET. “While for PSUs (these) are legacy issues and (their) workforce is linked to mining, they cannot take things for granted and expect to keep on acquiring mines and not use it,” the official said on condition of anonymity.

“A detailed study is needed to ascertain the reserves held by PSUs and their utilisation. For example, if SAIL has plans to go up to 50 million tonne capacity, it would need 100 mt of iron ore every year.”

The state-owned steelmaker currently has an annual iron ore production capacity of 64.5 mt, according to data available on its website. Out of this, it mined around 26.83 mt 2017-18, which makes for utilisation of 41% capacity. According to estimates, SAIL’s 2021 target of achieving 21 mt of steel will entail the use of only about 33.6 mt of iron ore per annum, experts said.

Similarly, NMDC produces around 38 million tonnes of iron ore per year, but the production potential is much more once the Kirandul Vizag railway line gets completed, experts said.

Both SAIL and NMDC did not respond to ET’s queries as of press time Wednesday.

There are other PSUs like Rashtriya Ispat Nigam Ltd (RINL) that do not have captive mines.

“There is a clear need for PSUs in the mining sector to revisit their ownership of blocks and surrender them in the larger interest of the end use industry like steel,” said a steel industry insider who did not wish to be named.

India produced 210 mt of iron ore in 2017-18, out of which it exported 15 mt.

However, according to estimates, the country is expected to become a net importer of the mineral by 2020.