State-owned steel maker Steel Authority of India Limited (SAIL) plans to invest around Rs. 800 crore to develop Bhilwara iron ore mine in Rajasthan and set up a pellet plant with 2 million tonne per annum capacity at the site.

The lease, granted to SAIL by the State government last week, is for the mine that is spread over 871 hectare with estimated reserves of around 150 million tonne.

“We plan to produce 5 mtpa iron ore a year from the mine and set up a pellet plant with 2 mtpa capacity with an estimated investment of Rs. 700-800 crore,” said C.S. Verma, Chairman of Steel Authority of India Ltd.

The company will start seeking requisite clearances soon after getting the Letter of Intent (LoI) from Rajasthan government and production from the mine is likely to start in 3-4 years, he said.

The Bhilwara mine would help SAIL to partially meet its increased iron ore need as the company raises its steel-making capacity to 24 mtpa by next year from 14 mtpa at present. It generally requires 1.6 tonnes of iron ore for producing every tonnes of steel.

SAIL never had iron ore problem and sources all its need from captive source. Last year, it had produced 21.48 MT ore to make 13.4 mt crude steel.

However, going by the rate of capacity addition, its need for the key input would also rise in the same proportion. The Bhilwara mine would thus prove helpful for the company in the days ahead.

SAIL has also prepared a blueprint to raise its steel manufacturing capacity to 50 mtpa by 2025, involving an investment of Rs. 1.5 lakh crore. To meet the growing need, it has started scouting for iron ore mines in Chhattisgarh, Madhya Pradesh, Maharashtra, Odisha and Karnataka.

It is also expanding capacities of its mines, as part of its Rs. 72,000 crore ongoing expansion and modernisation plans.

In Kiriburu, the capacity is being raised to 5.5 mtpa from 4.25 mtpa now. The capacity of Meghahatuburu mines is being raised to 6.5 mtpa from 4.3 mtpa now and in Bolani, the target is to raise it to 10 mtpa from 4.10 mtpa now.

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