KOLKATA (miningweekly.com) – The Steel Authority of India Limited (SAIL) would start inviting mine developers and operators (MDOs) to start project development at two of its prized iron-ore reserves by mid-July.

The decision to outsource mining at the two reserves had been finalised at top management level, with the tenders to be issued in July, a senior official said.

The bids and subsequent appointment of MDOs would kick-start SAIL’s development of iron-ore reserves at Chiria, in the eastern Indian province of Jharkhand and Rowghat in central province of Chhattisgarh. Both the reserves promised high-grade iron-ore for SAIL’s  current and future expansion of steelmaking capacity, the official said.

SAIL had established iron-ore reserves estimates at around 1.8-billion tonnes at Chiria and had been planning for its development since 2012.

The country’s largest steel producers had lined up investments to the tune of around $1-billion to produce 14-million tonnes a year of ore in phases.

Company officials said that, in the first phase, mine production would be seven-million tonnes a year, and the second phase would ramp up production by another one-million tonnes a year. The final phase to increase capacity to 14-million tonnes would be finalised only on the completion of the first two projects, they added.

The Chiria project would be implemented as per a detailed project report prepared by Canadian consultant Hatch, he said.

The MDO for the 500-million-tonne Rowghat reserves would be mandated to develop the mine to a capacity of around 14-million tonnes a year, entailing an investment of around $500-million.

The development of Rowghat had also been hanging fire for the last four to five years and initiation of the project had been hindered as the project location was susceptible to left wing extremists who controlled large tracts in the largely forested region.

Since 2012, the steel company had been requesting greater security cover to commence project work and recently the federal government deployed paramilitary forces to control left wing extremism around Rowghat.

The development of Chiria and Rowghat was critical to raw material security for expansion of SAIL's steelmaking capacity. The company had expanded capacity from 14-million to 23-million tonnes a year and would soon be undertaking the next phase of expansion. Plans were to increase steel production to 50-million tonnes a year, entailing an investment of $8.3-billion by 2025.

In an effort to meet higher requirements for raw material, SAIL planned to increase iron-ore production from captive mines to 43-million tonnes a year from current production of 28-million tonnes a year, and was banking on the majority of the incremental production coming from the Chiria mines, the official added.