Lack of adequate iron ore resources in the newly formed Indian province of Telengana has forced Indian steelmaker Steel Authority of India Limited (SAIL) to put its proposed steel mill in the region on the backburner, a local government authority told SteelOrbis on Wednesday, January 14.
The provincial government of Telengana, carved out in southern India last year, had proposed setting up a steel mill in the Khamman district based on iron ore resources in the region, the official said.
In response, SAIL had suggested a 3 million mt per year steel mill in the province requiring iron ore linkage at the rate of a minimum of 10 million mt per year.
However, SAIL, the country’s largest steel producer, put in a stipulation that the iron ore linkage to be offered to the steel mill should be for a minimum of 20 years or an assured iron ore linked reserve of 200 million mt of iron ore.
However, the total estimated mineable iron ore reserves in Telengana do not exceed 90 million mt, prompting SAIL to put the proposed steel project in cold storage, the official said.
Although SAIL may not be keen to pursue the project, the official said that senior provincial government officials will soon initiate negotiations with the federal government seeking iron ore supplies from neighboring provinces in southern India such as Karnataka to encourage the steel producer to commit to setting up the project.