MUMBAI: Andhra Pradesh government's recent decision to allot iron ore mines to state-run RashtriyaIspatNigam Ltd (RINL) will help it secure the crucial raw material for its capacity expansion at the Vizag unit, a top company official said.
"The allotment will help us secure iron ore for our expansion plans for Vizag unit," the RINL official told PTI.
As part of its expansion drive, RINL proposes to increase the capacity of its Vizag unit to 20 million tonnes (MT) in the future from the 3.8 MT achieved last fiscal, which will make it the largest steel unit in a single location in the country.
"Presently, the company procures iron ore from state run mining firm NMDC under a long-term supply arrangement. We can manage iron ore supply from outside agencies till 10 MT of capacity. Beyond that, we need our own iron ore supply for managing the cost of production," the official said.
Last week, Andhra Pradesh government alloted three mines to RINL, in which the company will start prospecting work after getting the nod from the Mines Ministry.
This is crucial for the state-run steel firm as till date it operates without a captive iron ore mine.
"This will help us control the cost of production in the long run," he said.
Referring to the process before mining starts at the new locations, the official said the present allotment would need the approval from the central government, after which prospecting work would start.
"Mining will take two years after getting the approval," he said.
The company, which had a crude steel production of 3.8 MT in the last fiscal, aims to complete its capacity expansion plan of 6.3 MT by the end of this year.