RINL looking for acquisition of mines overseas

14 Nov 2006

Mumbai: State-owned Rastriya Ispat Nigam Ltd (RINL) is looking to acquire iron ore and coal mines both abroad and at home. RINL, the corporate entity that runs the Vizag steel plant, is looking for acquisition of iron ore mines in Brazil, South Africa and other African countries. It is also eyeing coalmines in Australia and the US, although nothing concrete has emerged so far.

Faced with the problem of sourcing raw materials such as iron ore and coal at exorbitant prices, "the company is also mulling import of iron ore if it did not get captive mines," chairman and managing director Y Siva Sagar Rao said.

He said the landed cost of iron ore for RINL was about four times that of its competitors SAIL and Tata Steel who owned captive mines. RINL spends Rs700 crore every year for procuring iron ore, while the company's annual coal bill was around Rs1,400 crore, he said.

State-run NMDC Ltd, which supplies iron ore to RINL, had increased prices by 120 per cent in the last four years bringing them on par with international prices, which adversely hit the company's bottomline, Rao said.

RINL expects its annual requirement of iron ore to go up to 10-million tonnes from the current 6.5-million tonnes after the expansion of Vizag steel plant was completed by 2008-09.

The company was spending nearly Rs9,000 crore for expanding capacity of VSP from the existing 3.2 million tonnes to 6.3 million tones.

RINL, meanwhile, has proposed setting up a special economic zone for steel in Andhra Pradesh, for which it has sought 2,500 acres of land from the state government. The SEZ would be in proximity to the steel plant and it would also get a port facility near to it to ease the supply of raw materials.

According to the Rao, the proposed SEZ would have downstream units such as auto components, forging, wire rod and pipe fitting, for which the raw materials would be supplied by the RINL's Vizag Steel plant.

The distribution of resources in the SEZ would depend on the central government's national mineral policy, which is likely to come up soon.