Bhilai steel plant: Depleting iron ore reserves may hit expansion

30 January 2017

The Steel Authority of India’s (SAIL’s) Bhilai steel plant (BSP), the flagship unit of the company responsible for about one-third of its total sales, is grappling with a raw material supply issue as its iron ore reserves are “depleting”.

The Dalli-Rajhara iron ore complex of Chhattisgarh is the existing captive iron ore mines of BSP. “Ore reserves of the mines in Dalli-Rajhara complex are depleting. The lives of the mines, especially that of Dalli mine, at the present rate of mining is hardly 5 to 6 years. Thus, there will be a shortfall of about 3 million tonnes of iron ore at 7.5 million tonnes per annum (MTPA) hot metal stage of BSP,” SAIL told the Parliamentary Standing Committee on steel and coal when it last met on December 29, 2016.

The BSP is undergoing expansion to increase its hot metal production to 7.6 MTPA from the current actual capacity of 5.317 MTPA. After the expansion, the BSP’s iron ore requirement will be about 12 MTPA. The BSP has got another iron ore mine in Rowghat of Bastar region — it received the environment clearance for it on June 4, 2009. However, SAIL told the committee: “Development of Rowghat mine has been envisaged to meet the future iron ore requirement of BSP. But, since it is a greenfield project located in reserve forest, it has a long-gestation period of more than 5 years. The shortfall in fulfilling the overall requirement of iron ore is being fulfilled by supply from RMD (Raw Material Division), SAIL.”

The gross sales of the BSP, which is the largest of 5 integrated steel plants of SAIL, in 2015-16 were Rs 14,654 crore. The SAIL had a total gross sales of Rs 43,337 crore in 2015-16.

According to the MoU signed with the central government, the SAIL had decided that the BSP would manufacture total saleable steel of 4.42 MT in 2015-16. However, the BSP was able to manufacture 4.16 MT only. “MoU targets of total saleable steel production were achieved during 2013-14 and 2014-15, however, target for 2015-16 could not be achieved due to market conditions and poor health of Blooming and Billet Mill,” SAIL told the Committee. The company mentioned that one of the reasons for its poor performance in 2015-16 was the lower net sales realisation at Rs 30,553 per tonne as compared to the expected net sales realisation of Rs 37, 602 per tonne (which was stated in its annual business plan).

At Dalli-Rajhara iron ore complex, the BSP has 2 iron ore processing plants — one of it is located at Dalli, while the other at Rajhara. These 2 processing plants receive their ore from Rajhara mechanised mine, Dalli mechanised mine, Jharandalli, Dalli manual mine and even from Mahamaya mine that is located 20 kilometre away from this iron ore complex.

Even though the reserves are depleting, the SAIL informed the parliamentary committee about its strategy to ensure raw material security for BSP from Dalli-Rajhara iron ore complex. The company stated that it is looking for “production enhancement from Rajhara mines” by “opening up of new mining faces…to enhance production at Rajhara mine from 1.7 MTPA to 3 MTPA”. It also told the committee that is planning to set up a pellet plant at Dalli mine itself. “(We have) successfully finalised the global tender for most crucial turnkey project of setting up of a pellet plant at Dalli mine. Processed the case for obtaining stage-2 approval of SAIL board,” the company stated.

The SAIL has also obtained all statutory clearances for “opening up a new mine at Dulki in Mahamaya-Dulki lease to enhance iron ore production by 0.5 MTPA”. The company stated to parliamentary committee that it is going ahead with exploratory drilling at this iron ore complex with the help of Mineral Exploration Corporation Limited (MECL). “Memorandum of Understanding (MoU) between SAIL and MECL got renewed for further 3 years. Organised exploratory drilling of 7,000 meters in iron ore during 2014-15 to discover about 14.04 MT additional reserves and cumulative 48.72 MT since 2008-09. Till November 2016, a total of 33,108 meters drilling were conducted,” it stated.

BSP is also trying to get its greenfield project of Rowghat iron ore mine started as soon as possible. On August 27, 2016, SAIL issued a global tender for the “engagement of MDO (mine developer and operator) for development of 14 MTPA iron ore mine at Rowghat”.

Rowghat iron ore mine is estimated to have 511 MT of iron ore. SAIL told the parliamentary committee that 6 parties have participated in this bid which was opened on November 17, 2016. “The techno-commercial evaluation work is in progress. The tender discussion with bidders has been done between December 6-8, 2016,” the company noted.

For Rowghat iron ore mine, the company had issued a work order in July 2014 for construction of a 7-kilometre approach road at Rs 1.64 crore. “Tree cutting up to 3.2 kilometre (215 number of trees) stretch has been cut. The road up to 3.2 kilometre has been constructed. Further for balance area, enumeration and stamping work has also been completed by forest department,” SAIL told the Parliamentary Committee.

Source – Indian Express