Chhattisgarh, which already has 18% of India’s iron-ore reserves, has discovered new deposits in its western region and plans to award prospecting licences either by the end of the month or early May.
The deposits were discovered last year in Kabir Dham district and announced only recently. The new iron-ore resources are estimated to be at least 1,000 million tonnes (mt), spread over an area of 80-100sq. km.
If confirmed after prospecting, the new finds could make up as much as 43% of Chhattisgarh’s total iron-ore reserves, currently estimated at 2,300mt. The state was carved out of Madhya Pradesh in 2000.
The discovery of more iron ore allows the fledgling state to proceed with plans for new steel plants, which typically lead to jobs and big investments in infrastructure.
“We will be sure of the actual reserve position after prospecting is done,” said a government official who did not want to be named.
The deposits have been discovered in a thickly forested area by the directorate of geology and mining. Part of this area is home to Bhoramdeo, one of the 11 animal sanctuaries in the state. “Most of the iron ore is between high and medium grade,” said an officer in the geology department.
The area will be parcelled off to different prospectors, leading which is Chhattisgarh Mineral Development Corp. (CMDC), the state-owned mining agency formed in 2004.
The Chhattisgarh government wants the iron ore produced in the state to be used for steel making within the state, a recommendation also made by a committee convened to examine the National Mineral Policy and bring investment into the sector.
Most of the iron ore produced in Chhattisgarh is exported to domestic mills outside it, a practice the state is trying to reverse, even as it signs more agreements with steel investors.
Some 48 steel investors have expressed intent to set up plants in Chhattisgarh with hopes of getting captive mines.
The largest iron-ore reserve in Bailadila, in the southern Bastar region, is managed by National Mineral Development Corp. (NMDC), a steel ministry-run company under Central control. Most of its iron ore is exported to feed the Rashtriya Ispat Nigam Ltd’s steel plant in Andhra Pradesh and the Kudremukh Iron Ore Company Ltd in Karnataka, both owned by the government. Last month, CMDC signed a 49:51 joint-venture pact with its national counterpart to collaborate in mining at a Bailadila site with a reserve of 300mt—all to be used in the state, according to an official.
Last year, NMDC produced 26mt of iron ore, of which 3.2mt was exported to Japan and Korea. NMDC, its chairman and managing director B. Ramesh Kumar said, plans to increase production to 50mt by 2014. “We have some long-term export commitments, but will mainly supply to domestic industries after the contracts come to an end,” he said.
But Chhattisgarh is insisting that all fresh capacity should be used within the state. At present, the mineral company has committed to supply 2mt to the state’s 83 sponge-iron plants. “But the requirement for these plants is about 8-10mt,” said a state official on condition of anonymity.
Of the 14 sites for which NMDC has mining leases in Bailadila, three are unexplored. The state government has now recommended Tata Steel and Essar Steel for two of these. For the newest iron-ore deposits in Kabir Dham, the state mining ministry has already received 50 applications for initial prospecting, which takes about three years. Those who have applied for licences include The Hira Group and Jindal Power & Steel Ltd, said an official.