OMC signs long-term iron ore sale pacts for Khandadhar mines

Source : BUSINESS_STANDARD
By : Sadananda Mohapatra
Last Updated: Mon, Jul 30, 2012 19:12 hrs

State-run miner Odisha Mining Corporation (OMC) has signed pacts with steel makers Adhunik Metaliks and Rexon Strips to supply iron ore for next five years from its Kurmitar Pahar mines in Khandadhar area in Koira mining circle of Sundergarh district.

“We have entered into two long-term sales agreements with two companies-Adhunik Metaliks and Rexon Strips. These companies will get one million tonne iron ore every year for a period of five year from Kurmitar mine (Khandadhar),” said Saswat Mishra, chairman-cum-managing director of OMC.

In return, the steel firms have agreed to develop a conveyor belt system in the area to augment iron ore evacuation from the mine, which is spread over 1,212.hactares and estimated to have over 60 million tonne iron ore deposits.

“The companies will invest between Rs 100 to Rs 150 crore on their own in setting up the conveyor belt in lieu of our commitment to supply them iron ore continuously for five years at prevailing market rates,” said Mishra.

The deal would not only ensure raw material supply to these steel units, but also boost production from the Kurmitar Pahar mines, he added.

Currently Kurmitar produces only 1.5 million tonne iron ore every year due to constraints in evacuation. The proposed conveyor belt transportation system would help in ramping up the output at the mining site by four-fold.

“At our Khandadhar mine, currently we are evacuating iron ore through a narrow and hilly terrain and thereby are able to produce only 1.5 million tonne a year. If a conveyor belt is set up in the area, then the production would go up to over four and half million tonne,” Mishra said.

Raw material supply is key to Odisha's ambition of becoming the largest steel producer in the country. The state has over five billion tonne of iron ore deposits and has signed memorandum of understanding (MoU) with 50 companies for setting up of steel projects with a combined projected capacity of 83 million tonne at total estimated investment of over Rs 2 lakh crore.

Many steel makers in the state are lobbying hard to enter into long-term supply pact with OMC as they have not been allotted captive mines.

The state government has stopped leasing out mines to private companies after it was dragged to the court over grant of prospecting license to Posco in Khandadhar area and faced allegations over massive illegal mining in the state.

Recently, the state government has decided to defer mines allocation to MoU signed steel units until Supreme Court came out with a clear guideline on allocation of natural resources in the case pending before it.

The Supreme Court, while hearing a case on 2G scam, had observed that all natural resources should be auctioned and should not be given away on first-come-first-serve basis.

Following this, the Central government has objected through a Presidential Reference, questioning the apex court’s capacity to intervene in policy matters.



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