KOLKATA (miningweekly.com) - The ongoing bifurcation of the southern Indian province of Andhra Pradesh has put a spanner in the plans of steel producer Rashtriya Ispat Nigam Limited (RINL) to secure a captive iron-ore mine in the region.

The government of Andhra Pradesh had approved the steel producer’s plans to explore iron-ore resources across 2 500 ha in the region, though the prospective licence (PL) was yet to be granted to RINL.

Moreover, with Andhra Pradesh to be bifurcated into two provinces, these iron-ore resources would be located in the new province while RINL’s steelmaking facility, in the port town of Vishakhapatnam, would fall within the residual old province, resulting in political roadblocks in securing the captive iron-ore source, local government officials said.

The political leadership that spearheaded the carving out of a new province from Andhra Pradesh had made it clear that it would be against any investments that resulted in shipping the raw material out of the newly formed province, preferring steelmaking production facilities to be located within Telengana, as the new region would be christened, the officials said.

RINL officials said, however, that the government-owned steel producer would approach the government of Telengana, once it was elected, for continuation of a proposal for exploration and the PL, already approved by the undivided province.

The officials conceded that this would not only mean that the whole process would have to be started from scratch, but that the decision of the new government of Telengana would be influenced by political compulsions, as the very idea of creating a new state was to establish a new identify for the region, independent from that of undivided Andhra Pradesh.

As for Telengana’s governmental demand for a steel plant near the ore reserves, RINL officials said that any investment in a greenfield steel plant was always based on a captive mine with a life span of at least 30 years, and that no estimates of the reserves were currently available for the area proposed to be handed over to RINL for exploration.

As a result, an investment commitment for a steel plant in the new province was premature, the official added.

With the hopes of securing captive iron-ore mines close to its plant in southern Indian receding, RINL was pushing for iron reserves in the central Indian desert province of Rajasthan.

The government of Rajasthan had offered the Mines Ministry 4 800 ha with estimated reserves of 650-million tonnes for exploration and development by RINL, but on the condition that the latter committed to value addition of the mined ore within Rajasthan, the official said.