KOLKATA (miningweekly.com) – India’s Mines Ministry on Tuesday permitted State-run steel producer, Steel Authority of India Limited (SAIL), to sell 25% of the iron-ore it produced in the previous year from its captive mines on the open market.

The move by the Mines Ministry is aimed at alleviating iron-ore shortages at domestic steel mills without captive iron-ore mines.

SAIL will have a window of two years to conduct open market merchant sale of iron-ore from its captive mines.

The company operates five integrated steel mills across the country with aggregate steelmaking capacity of 24-million tons a year and has 20 captive iron-ore mines across the states of Jharkhand, Odisha, Chhattisgarh and West Bengal, with average production of 28-million tons a year.

SAIL has informed the government that it could ramp up production from its captive iron-ore mines by seven-million to eight-million tons in 2020/21 and another ten-million to 12-million tons a year by 2021/22.

Domestic steel producers are concerned that they could be facing iron-ore shortages of about 60-million tons a year, as 31 operational iron-ore mines across the country will see their mining leases lapse on March 31, 2020, and imminent failure to auction fresh mining leases will force production from these mines to be stopped.

“In order to maintain the availability of iron-ore in the market and considering the capability of captive mines of SAIL to increase their production, the central government, in exercise of the power conferred under section 20A of Mines, Minerals Development Act, hereby allows SAIL to sell in a year up to a quantity equivalent to maximum of 25% of its total production in the previous year. The norm of 25% of total production shall be calculated on the cumulative production of all captive mines under SAIL,” a Mines Ministry notification issued in Tuesday said.

In a separate order, the Mines Ministry said that about 70-million tons of low-grade iron-ore, including slime, were lying idle at mine pitheads of SAIL and this too would be allowed for free merchant sale by the steel producer.

“SAIL does not have enough beneficiation and pelletisation capacity. Hence it is not possible for it to consumer these low grade iron-ore fines at its own steel mills and it is imperative that the sub-grade ore which is not suitable for end-use for captive purpose be allowed to be sold to the domestic end-use companies,” the Mines Ministry notification said.