Rashtriya Ispat Nigam and National Mineral Development Corporation, on 16 September 2005, signed an MoU to set up a sponge iron (pelletization) plant in Chhattisgarh as a joint venture. The project details are being firmed up.

The plant will enable RINL (that operates the Visakhapatnam steel plant) to obtain additional mining leases, which would eventually help the company meet the increased requirement of the company in view of its ongoing expansion plans.

It may be mentioned that RINL's expansion proposal is awaiting clearance by the Union Cabinet. The expansion plan envisages increasing the hot metal capacity of the Vizag plant from 3.6 million tpa to around 6 million tpa.

Since RINL does not have captive iron ore mines, its expansion plan is being impeded. Although RINL has approached the Orissa and Chhattisgarh governments for mining leases, it has not been successful since it cannot honour the "local value addition" norm. The proposed joint venture might resolve the issue.