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Open auction makes it difficult for VSP to procure mine

Open-auction-makes-it-difficult-for-VSP-to-procure-mine

While the absence of its own captive iron ore mine pushes Visakhapatnam Steel Plant into losses triggering the scope of privatisation, the low-grade iron ore mines explored in Andhra Pradesh remain largely unused. According to the Department of Mines and Geology, Andhra Pradesh is a treasure house for 48 minerals including the lowgrade iron ore. The state has got 285 million tonnes of low-grade iron ore explored in Prakasam, Guntur, Anantapur and Kurnool districts.

However, only less than one million tonnes have been mined out so far till 2014-15 and all the leased mines are not in operational mode. India has 17,882 MT of iron ore deposits and Andhra Pradesh holds a share of 1.6 per cent in total deposits, while Odisha and Jharkhand are home for about 60 per cent of the iron ore deposits. The state government is forced to withdraw its plans for leasing out mines keeping in view public protests and environmental issues.

In 2019, the AP government signed a Memorandum of Understanding (MoU) with the National Mineral Development Corporation (NMDC) for supplying iron ore to the AP HighGrade Steel Limited (Kadapa steel plant). NMDC Director (Commercial) Alok Kumar Mehta and AP High-Grade Steel Limited chairman and managing director P Madhusudhan had signed the MoU in the presence of Chief Minister YS Jaganmohan Reddy at the latter’s camp office. Under the agreement, the NMDC will supply five million tonnes of iron ore to Kadapa Steel Plant per year.

To reduce cost, the NMDC will supply iron ore from the mines close to the plant in the first phase. The Vizag Steel Plant largely depends on the NMDC’s Bailadila iron ore mine for raw material. Due to the open auction for mines, PSUs find it difficult to win the bid as private players quote a high price.

While there were no clear reasons as to why VSP was not allocated a captive mine all these years, the effort to secure a mine in a recent auction in Odisha made its management realise that the task has only become tougher. In 2017, RINL made a bid for a mine in Odisha, but private steelmaker Bhushan Steel quoted a price 300 per cent higher than what RINL was willing to pay for the mine.

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