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Captive mining to fuel steel cos' expansion plans
March 24, 2008: Steel companies will not be required to take new iron ore mines for expanding plant capacities as the new policy has allowed additional mining of captive mines. The move will provide raw material guarantee for over Rs.1,00,000 crore investment proposed by the two companies to add 35 million tonnes of additional steel capacity over the next few years.
At present, a mining lease is renewed automatically, subject to it fulfilling all the lease conditions. The mineral-rich states, however, wanted renewal of applications to be linked to existing steel capacity of companies based on their plant life. This would have freed some proven mines for use by other applicants.
However, the policy has favoured long-term linkage to companies to support their expansion. The decision would primarily benefit Tata Steel and SAIL as these are the only companies, apart from a couple of minor ones, having captive iron ore mines. There were fears that expansion plans of these companies would be hit if long-term iron ore linkage is not assured.
Source: Economic Times