The Telegraph
Since 1st March, 1999
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Mittal open to Chiria pact with SAIL

Luxembourg, Nov. 20: ArcelorMittal has proposed to join hands with state-run Steel Authority of India (SAIL) to develop the famed Chiria iron ore mines in Jharkhand.

Aditya Mittal, the chief financial officer and a group management board member of the world’s largest steel maker, said he was keen to co-operate with India’s largest steel company, in Chiria and beyond.

“We can do a lot together,” Mittal said. The scion of the steel empire, founded by his Calcutta-born father Lakshmi Niwas Mittal, said he had made an overture to SAIL’s top management.

“We said we were ready to co-operate,” Mittal told The Telegraph at the ArcelorMittal’s headquarters in Luxembourg.

What has been SAIL’s response' “They are examining the proposal,” he said. “We are open to the idea of a joint venture with SAIL to develop Chiria.”

SAIL sources, however, maintained that the company needed every bit of the ore within its leasehold area for its aggressive expansion plans.

“There may be reserves outside our leasehold area in Chiria. The Jharkhand government can give it to anybody else, including the Mittals,” the sources added.

Incidentally, Jharkhand had offered to lease the Ankua iron ore fields to ArcelorMittal, but the company turned down the offer.

ArcelorMittal, which has proposed to set up a 12-million-tonne steel plant in Jharkhand, has set its sights on Chiria as a captive source of iron ore.

SAIL has several leases on the Chiria mines which have reserves of an estimated 2 billion tonnes of rich quality iron ore. Its leasehold is distributed among six blocks — Ajitaburu, McLellan, Dhoubil, Sukri, Ankua and Tatiburu — over 2,375 hectares in the west Singhbhum district of Jharkhand.

However, the Jharkhand government has disputed SAIL’s claim to two of the six blocks — Ajitaburu and Sukri — spread over a combined leasehold area of 933 hectares.

These blocks were with the erstwhile IISCO.

After its merger with SAIL, the latter has staked its claim to the two blocks. Since IISCO had little capacity and turned sick, the mines were underutilised.

Now, SAIL plans to fully mechanise mining here, taking the capacity to 15 million tonnes per year and then up to 50 million tonnes. It will appoint a global consultant shortly for the expansion.

ArcelorMittal argues that SAIL will not require all of the Chiria reserves.

The company wants 600 million tonnes for its $10-billion project there.

Steel minister Ram Vilas Paswan had proposed to split the Chiria reserves.

Estimating the iron ore reserves at 3 billion tonnes, Paswan had said 1 billion tonnes could be given to private players and the rest could be earmarked for SAIL.

ArcelorMittal had earlier made it clear that a right to Chiria ore was critical for its Jharkhand plant.

Aditya Mittal said such a huge plant could not survive only on ore fines. India exports 90 million tonnes of fines every year and many companies are looking to use this to make steel.

Meanwhile, the Jharkhand government has given a prospecting licence to JSW Steel for a part of the Ankua deposit.

Apart from ArcelorMittal, Tata Steel and other private players have also set their sights on Chiria.

While SAIL is refusing to relent on Chiria, it is open to an alliance with ArcelorMittal in areas such as R&D and manpower sharing. It has a similar agreement with Korean steel major Posco.

Aditya Mittal said his company was ready to go in for a broad cooperation with SAIL beyond mining, but did not divulge any details.

However, the Jharkhand plant will be built by ArcelorMittal itself.

In order to appease the Jharkhand government, SAIL has proposed to set up a new 15-million-tonne plant there in addition to expanding the capacity at Bokaro.

ArcelorMittal has been allotted coal blocks in Jharkhand and Orissa for power generation. In Orissa, the company may team up with state-owned agencies to source iron ore for another 12-million-tonne plant.

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