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SAIL push for Chiria gathers pace

New Delhi, Nov. 25: The Prime Minister’s Office (PMO) is sensing a shift in the stand of the Jharkhand government on Chiria iron ore in favour of the Steel Authority of India Limited (SAIL).

It had proposed that SAIL should retain the Chiria mines, and the state government is veering towards the view.

Senior officials said, “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,” they said.

The alternative, according to the officials, is prolonged litigation which will serve no purpose. “Besides once the new iron ore policy comes in, the state cannot even allocate any iron ore deposits to industrialists of its choosing.”

In its new mineral policy, which is yet to get cabinet approval, the government has proposed auctioning of mines instead of allocations by states.

The bidders will give back a percentage of the mined mineral to states as a licence payment and can ship the rest out of the state.

Several big steel companies, including AreclorMittal, the world’s No. 1 steel maker, are interested in a slice of Chiria, whose reserve of good-quality of ore is reportedly the largest in Asia.

Jharkhand is keen on parcelling the reserve to more entities, besides SAIL, but its move to take back two iron ore blocks from SAIL is stuck in courts.

State-run SAIL has refused to part with Chiria which it acquired when it took over IISCO Steel Plant in Bengal two years ago.

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 (mt). This will take its steel making capacity in Jharkhand and Burnpur alone to 32.5mt.

Coal tiff

Though it is satisfied with Jharkhand’s attitude towards Chiria, the Centre is worried over the state’s stand on the allocation of coal blocks to SAIL.

Steel ministry officials said, “We have allocated some 15 blocks to various private companies, including those which did not even file their financial statements or full development plans on the basis of recommendations made by the state government. But Jharkhand has not recommended SAIL for any coal block as yet.”

Blocks were allocated recently to ArcelorMittal, CESC, Essar Power, Reliance Energy and Tata Power, among others.

According to SAIL officials, the company is on its way to build two 250 mega watt (MW) power plants at Bokaro and two more of the same capacity at Bhilai. It also has plans for power plants in the Burnpur-Durgapur region to feed its steel units.

On the other hand, companies have got coal blocks just by filing plans to build such plants in the future. In all, SAIL plans to add about 1,500MW of captive power generation capacity.

For the July-September period, SAIL announced a net profit of Rs 1,700.24 crore, which is 17 per cent higher than the year-ago period. Net profit for the first half of the year also went up 14 per cent to Rs 3,225.36 crore.

The profits came on a second-quarter turnover of Rs 10,371.63 crore and a first-half turnover of Rs 19,270.08 crore.

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