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Panel may leave Posco, Mittal in fray

August 22, 2005 09:49 IST

The RK Dang committee, set up by the steel ministry, is likely to recommend in its final report that only integrated foreign steel manufacturers be given preference in allotment of mining leases and other linkages. It may also suggest that a project must have an annual capacity of 10 million tonnes.

Thus, at present, the race is between LN Mittal's Mittal Steel and South Korean major Posco.

Officials in the ministry of steel said the project must be commissioned within seven years and based on 100 per cent utilisation of all ROM grades of iron ore above 55 per cent iron content.

The ministry is likely to put a cap of 30 per cent on any iron ore export or import swap. Iron content and lump ore swap proportions will remain strictly equal but variations in silica, alumina and other gangue material can be permitted.

Moreover, the international steel company should also be "bringing in foreign direct investment to the extent of minimum 85 per cent of project cost" and the projects should be applying through an Indian public limited company. The preferential rights will entitle them only for a single ore-based location in any state with large ore reserves.

Experts say that the clause will start a fresh round of speculation as to which international steel company will get the right to mine first.

"This may entitle either of the two global steel tycoons to sign only one integrated steel plant agreement or may start the race where only one of the two get preferential rights to captive iron ore mines," said a company executive.

"Posco has signed a deal, allowing a swap of 30 per cent iron ore," said an expert. "But if Mittal agrees on something less, then the Posco deal may be put on hold," he added.

Posco did sign the Memorandum of Understanding with the Orissa government in June this year while the Mittals are expected to sign in the coming months.

"Though the Posco MoU may have been signed ahead of the Mittals, but MoUs do not have any legal value," says another expert.

Officials also maintain that Posco has reportedly been assured of the Gandhamardan-Malangtuli iron ore mines on the border of Keonjhar-Sundergarh district for its Paradeep project.

The belt is estimated to be having about 400-million tonnes of quality iron ore.

Steel a glance

  • Only integrated foreign steel manufacturers may be given preference in allotment of mining leases and other linkages.
  • The project should be commissioned within seven years and based on 100% utilisation of all ROM grades of ore above 55% iron content.
  • The ministry is likely to put a cap of 30 per cent on any iron ore export or import swap
Varun Sood in New Delhi
Source: