KOLKATA (miningweekly.com) - India’s largest government-owned steel producer Steel Authority of India Limited (SAIL) would seek bids from mine developer-operators (MDOs) to develop its 1.8-billion-tonne Chiria iron-ore reserves, in the eastern Indian province of Jharkhand.

According to company officials, bids from MDOs would be invited over the next three months and the successful bidder would be entrusted with the development of the Chiria iron-ore reserves, based on a detailed project report already prepared by Canada-headquartered engineering and mining consultants Hatch.

The first phase of the development would be for production of seven-million tonnes a year of ore to be ramped up to eight-million tonnes a year in the second phase.

The first phase of the project would be completed within three to four years from the date of appointment of the MDO, the officials said.

SAIL, which had been planning development of the Chiria reserves since 2012, has earmarked an investment of $1-billion for the first two phases of the project, which would ultimately be increased to produce 15-million tonnes a year. But at the moment the steel producer would only be focusing on the first two phases, the officials added.

The development of the Chiria reserves was critical for raw material supplies for the planned expansion of SAIL’s steelmaking capacity.

The company would be completing its current capacity expansion from 14-million tonnes a year to 23-million tonnes a year by September 2014, when it would embark on the next phase of expansion to take steel production capacity to 50-million tonnes a year, entailing fresh investment of $8.3-billion by 2025.

Over the next two to three years the steel producer targeted increasing iron-ore production from captive mines to 43-million tonnes a year from the current level of 28-million tonnes a year to feed its expanded capacity. The bulk of the incremental production would come from Chiria, reported to have some of the best quality iron-ore reserves in the country.