SAIL allowed selling iron ore from captive mines

A worker stacks steel pipes in Ahmedabad on November 4, 2014. (REUTERS File Photo)

New Delhi, September 17 (IANS): In a big reform initiative, government has allowed state-owned Steel Authority of India Ltd (SAIL) to sell 25 per cent of its iron ore production from captive mines and dispose off other low grade iron ore dust and fines accumulated over the years in the open market.

The move will allow the state-owned steel major to commercially offload upto 7 million tonnes high grade iron ore and another 70 million tones of slime, iron ore dust and fines improve its realization.

SAIL scrip was 1.05 per cent up on BSE around 3 p.m. at Rs 33.65 a share.

As present, production from captive mines is solely meant for consumption of the company that has been allotted a mine. Any surplus is either left unsold or handed to state mineral corporations which then sells the mineral commercially.

As per an order issued by the Mines Ministry under the provisions of Section 20 A of the Mines and Mineral (Development and Regulation), Act, 1957, SAIL has been permitted sale of sub-grade minerals lying at the mine pitheads of its captive mines. Such sale can only be undertaken after the approval of the respective state government where the mine is located. State governments will decide the quantity and procedure of such sale in consultation with Indian Bureau of Mines.

The decision has been taken to prevent accumulation of ore dust and fines at mine heads from becoming a big environmental hazard while allowing the state owned entity to maximise value from this mineral.

Industry sources said that mines ministry order has also permitted SAIL to sell surplus production of even high grade iron open with over 62 per cent iron content. But such sale will be restricted to 25 per cent of its total production.
SAIL produced just over 27 million tonne of iron ore last year. So, it could undertake sale of high grade iron ore as well to other steel making units at much better valuation.

Sources, however, said that entire 7 million tones of this grade of ore may not be sold this year as SAIL itself has large ore needs to feed its 21 million tonne steel making capacity that is gradually being ramped up to 50 million tones under next phase of expansion.

There is a market for low grade ores and fines as well. SAIL can sell these to companies that agglomerate ore for use by the steel sector.

SAIL has around two dozen iron ore mines in Chhattisgarh, Jharkhand and Odisha. These would be utilized for commercial sale of ore.