KOLKATA (miningweekly.com) – Indian state-run steel producer Rashtriya Ispat Nigam Limited (RINL), which operates a 6.3-million-ton-a-year steel mill without any captive iron-ore asset, is planning to participate at auction of iron-ore blocks and at the same time diversify its raw material sourcing to reduce dependency on miner, NMDC.

RINL, whose steel mill is in the southern port town of Vishakhapatnam in Andhra Pradesh, is  looking to participate in the neighbouring state of Odisha’s forthcoming auction of ten iron-ore blocks.

Officials said that the steel producers had ‘realised’ the risk of depending on single source of raw material from State-run miner NMDC and having failed to secure a raw material source through preferential allotment by the central government, they have decided to diversify their sourcing of iron-ore.

The de-risking of raw material source is also a necessity for RINL, which is working on adding another one-million tons a year of steel-making capacity to its Vishakhapatnam steel mill over the next few years, the officials added.

Besides securing iron-ore blocks through competitive bidding, the steelmaker is  also looking at merchant purchase of iron-ore from mines in Odisha, including entering into long-term supply agreement for supplies from mines under Odisha Mining Corporation (OMC), the mineral mining arm of the Odisha government.

Pointing out that between April and September supplies of iron-ore from NMDC fell below 50% of RINL’s requirement, the officials said that sourcing the raw material from Odisha would require factoring in higher prices and issues relating to transportation in view of shortage of railways rakes available from state transporter, Indian Railways.

Part of the risks involved in single source raw material is also expected to be mitigated with RINL’s plans to construct a two-million-ton-a-year iron ore pelletisation plant in a joint venture with KIOCL (formerly Kudremukh Iron Ore Company).

A recent announcement by KIOCL stated that the plant would be located at Vishakhapatnam on a 75 acres of land to be provided by RINL.