The proposed lease of the IISCO-owned iron ore mines in Chiria in West Singhbum district in Jharkhand to Mittal Steel could lead to a major confrontation with SAIL unless the two steelmakers agree on a deal.
Chira mines were captive mines of Indian Iron & Steel Company, which had been mining the deposits quite extensively for many years now.
Mittal Steel signed an agreement with the Jharkhand government on October 8, 2005 for setting up a 10 million tonne steel plant in West Singhbhum district.
It sought 10,000 acres and 600 million tonnes of mineable iron ore deposit to feed its plant for the first 30 years with an additional 400 million tonnes to be mined over the next 20 years.
Mineral Exploration Corporation Ltd undertook the initial detailed exploration work in Chira in 1970-72.
It had divided the entire deposit into four blocks viz North Block, South Block, West-Central Block and East Central Block.
The exploration of Chira deposit was done by MCL in two phases.
As a follow-up action on the agreement with the Jharkhand government, Mittal Steel recently sent a two-member delegation led by its newly appointed CEO in India, Sanak Mishra, to discuss the iron ore lease issue with the Jharkhand state chief minister, Arjun Munda, the state mines & geology minister Madhu Koda, chief secretary P P Sharma and mines secretary A K Singh.
During discussions, the state government officials told the Mittal delegation that virgin mines in Chira, Gua, Jamda and Noamundi in West Singhbhum district had been identified for the Mittal Steel project.
As the Chira iron ore mines were in possession of IISCO, Mittal Steel officials asked the state government to allot some other iron ore reserves and precipitate a confrontation by allotting the Chiria mines, which were at present under IISCO.
The Jharkhand government on its part had been fighting for some years now to cancel all the leases on iron ore and other mines granted in the past to IISCO in West Singhbhum district.
Jharkhand succeeded in cancelling three of the 10 leases relating to the Chiria and Gua mines.
Industry sources indicated that Mittal Steel did not want to get involved in any confrontation with any company on the mine lease issue.
Industry sources pointed out that at present, all the leases relating to the Chira mines were with IISCO.
After completion of the proposed merger of IISCO with Sail, the leases granted to IISCO could be cancelled unless the leases were transferred to Sail.
Sources said there were no provisions in the minerals act to transfer lease to another party.
Against this backdrop of lease controversy regarding IISCO mines raised by the Jharkhand government, Mittal steel could be forced to go in for a joint venture (JV) with Sail to utilise the iron ore reserves in Chira mines to meet the requirement of its steel plant and to export come surplus iron ore.
Industry sources told Business Standard that in order to avoid any controversy relating to the lease of Chira mines, Mittal Steel had inducted Sanak Mishra as the CEO in India immediately after his superannuation in December 2005 from the post of managing director of the Rourkela Steel Plant of Sail.
Sources said Mishra was conversant with the mining sector in the eastern region because of his long association with Sail in various positions.
With the induction of Mishra as CEO of Mittal Steel in India, the proposed move to form a JV between Sail and Mittal Steel for extraction and use of iron ore in Jharkhand could become possible, said sources.
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