Indian Mining Companies Look to Add Metal Production Units

TC Malhotra contributes to MetalMiner from New Delhi.

In an attempt to secure mining leases, Indian mining companies such as NMDC, MOIL and Sesa Goa plan to foray into metal and alloy production.

According to a Business Line report, mineral-rich states like Karnataka and Chhattisgarh are looking at value addition as a pre-condition for granting new mining leases and renewing existing ones.

The report states that the National Mineral Development Corporation (NMDC) has plans to invest Rs 150 billion ($33.3 million) to set up a 3-million-tons-per-year unit at Nagarnar in Chhattisgarh State.

NMDC is India’s largest iron ore producer and exporter, producing about 30 million tons of iron ore from three fully mechanized mines in Chhattisgarh and Karnataka states. It also operates the only mechanized diamond mine in the country at Panna in Madhya Pradesh state.

Manganese (Ore) India Limited (MOIL) has also decided to set up two ferro-alloy units through joint ventures with Steel Authority of India (SAIL) and Rashtriya Ispat Nigam Limited (RINL). The proposed ferro-alloy plant with SAIL in Chhattisgarh will have a capacity of 106,000 tons, while the one with RINL in Andhra Pradesh State will produce 57,500 tons. MOIL is India’s largest producer of manganese ore by volume.

Sesa Goa, which operates major mines in Karnataka, has also acquired the assets of Bellary Steel and Alloys Ltd (BSAL) in Bellary for Rs 2.20 billion ($48.8 million). BSAL was building a half-million-ton/year unit and has 700 acres of land in Bellary. Sesa Goa is India’s largest private-sector producer and exporter of iron ore.

Under the new mining policy, Chhattisgarh state decided there would have to be a greater value addition by the mining companies that hold leases for mines estimated to have 65 percent of the iron ore deposits in the state.

About 20 percent of India’s iron ore reserves are found in Chhattisgarh, mainly in the hilly pockets of Bastar region.

Chhattisgarh also has vast reserves of coal, iron ore, bauxite, dolomite, limestone, quartzite, and diamond.

In December 2008, the Karnataka state government unveiled its new mining policy aimed at banning iron ore exports and encourage value addition of the product.

While announcing the new mining policy, the state government said that issuance of any new licenses will be “pre-conditioned to value addition in the state without destabilizing the state’s forest wealth and bio-diversity.

One of the highlights of the new policy is that no new licenses would be granted to export minerals without value-add. Furthermore, there would be no renewal of existing licenses for exports, but those who have valid export permits can continue exporting.

The new policy has 13 objectives, including progressive features such as adoption of modern techniques in mining, transparency in granting mineral licenses and emphasis on value addition.

The government will give priority to the applicants that propose establishment of industries for value addition within the vicinity of the mineral-bearing areas, the policy said.

–TC Malhotra

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