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Rediff.com  » Business » Essar Group gets mining rights in Brazil

Essar Group gets mining rights in Brazil

January 19, 2009 13:21 IST

The Essar group has bagged a mineral concession in Amapa, North Brazil, which will cater to its proposed steel plant in Trinidad and Tobago in the South Caribbean.

When contacted, P R Dhariwal, chief executive officer for the project, said that the group would go ahead for a full scale mining license based on the results of the exploration.

The survey would take 6-8 months and as part of the concession, Essar would be able to conduct exploratory mining for iron ore, manganese ore, chrome ore or any other available mineral.

The area, that Essar has earmarked for exploration, measures 7,851.69 hectares and is one of the larger deposits. The mining concession was granted by departmento nacional de producao mineral, government of Brazil, in response to Essar's application.

The area is 150 km from the Santana Public Port in Macapa, on the banks of the Amazon river and very close to Essar's proposed steel plant in Trinidad and Tobago.

The 2.5-million-tonnes steel plant in Trinidad and Tobago is part of the group's plan of achieving a capacity of 20-25 million tonnes by 2012 from the present level of eight million tonnes.

Sources said that Essar was in the process of achieving financial closure for the Trinidad and Tobago project. 

The Brazil iron ore resource would be Essar Steel's second international raw material deposit. In 2007, Essar Steel acquired Minnesota Steel, which has more than 1.4 billion tonnes of iron ore resources in the Mesabi range.

Back home, Essar Steel has bagged a prospecting licence in Chhattisgarh but is still awaiting necessary clearances. The company sources most of its iron ore requirements from public sector miner, NMDC.

Essar Steel currently has a capacity of nine million tonnes across its facilities in the domestic and international markets.

In India, the company has a capacity of 4.6 million tonnes at Hazira in Gujarat, and plans to increase it to 10 million tonnes. Essar is also setting up a six-million-tonne integrated steel plant in Orissa.

Industry sources pointed out that the companies are increasingly looking to acquire raw material assets outside of India since the allocation is much quicker. 

India has approximately 23.59 billion tonnes of iron ore scattered in states like Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. Of this, only 6.311 billion tonnes is proven reserves and the balance are possible reserves.

"Allocation takes time and even if we get a licence, it will take a couple of years before one can start mining in India," pointed out an industry representative.

Ishita Ayan Dutt in Kolkata
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