December 04, 2008

SAIL push for Chiria gathers pace

It is reported that Jharkhand government, despite instructions from Prime Minister’s Office to grant lease for entire Chiria deposits to rightful owner Steel Authority of India Limited, is still clamoring for a pie to satisfy private steel makers.

Jharkhand government is understood to have asked for a realistic assessment of requirements of SAIL. As per reports, "Jharkhand government has questioned the basis of SAIL's assessment of seeking entire 2 billion tonnes of iron ore from Chiria mines and has suggested that SAIL should make a realistic assessment of its needs.” Jharkhand government has also contended that since it has signed 35 MoUs, it needed to ensure adequate ore to the steel companies seeking to set up projects there.

The report cited an official as saying that “There is some resistance from the state to the concept of SAIL retaining the whole of Chiria but they too have accepted the principle that SAIL’s needs for iron ore has to be met first. We are increasingly getting the feel that the state government will accept SAIL’s position.”

According to the officials the alternative before Jharkhand government is prolonged litigation which will serve no purpose. He added that “Besides once the new iron ore policy comes in, the state cannot even allocate any iron ore deposits to industrialists of its choosing.”

The sources said that "But SAIL too is in desperate need of iron ore to fructify its expansion plans worth INR 54,000 crore to take up its production capacity to 26 million tonnes. Besides, we are the rightful claimant of the mines. When the commodity cycle was low and the fate of Chiria was being debated there were no takers. Suddenly the state government realizes that Chiria is so important."

SAIL has refused to part with Chiria which it acquired when it took over IISCO Steel Plant in Bengal two years ago. Even Mr Ram Vilas Paswan union steel minister had reasoned that 2 billion tonnes of ore should be given to SAIL. He has opposed sharing of the ore saying it could be prejudicial to the long term interest of the steel company. He added that SAIL's existing iron ore resources were insufficient to meet its long term needs and therefore it was not in a position to share the mineral.

SAIL had placed its case before the PMO, which is a mediator in the PSU’s dispute with Jharkhand, arguing it needs the ore for its projects in the state and the expansion of IISCO at Burnpur. In Jharkhand, besides ramping up capacities of the Bokaro plant, SAIL will set up a new plant at Manoharpur with a capacity of 12 million tonnes, which will take its steel making capacity in Jharkhand and Burnpur alone to 32.5 million tonnes.