Sajjan Jindal-controlled JSW Steel Group will invest around Rs 5.5 billion in its Chilean mining concessions to ensure 50 per cent iron ore security by June 2009, up from 30 per cent now.
The group produces seven million tones of steel annually and requires 11.2 million tones of iron ore for that. In addition, JSW Steel Director (finance) Seshagiri Rao said, the group has reached an agreement with a Mozambican party with a mining licence for the supply of coking coal.
Of late, several large steel producers have secured their raw material supplies, after the sharp rise in the prices of iron ore and coking coal, which together account for more than 80 per cent of the cost of steel production.
The Chilean iron ore mines will be developed to 20 million tonnes over 36 months. However, the iron ore mined in Chile will not be used in the group's steel plants in the country. "We will hedge…we will sell the iron ore there and buy it here," Mr Rao said. He added that negotiations with equipment suppliers were currently on to ramp up production at the Chilean mines.
JSW Steel (Netherlands) BV had acquired Santa Fe Mining earlier this year. Santa Fe Mining has interests in 124 mining concessions in four mines. JSW had secured the prospecting licence for the magnetite deposits for $52 million.
Industry sources pointed out that more and more steel producers were looking for raw material sources outside India since the quality of coking coal available in India was not suitable for steelmaking and captive iron ore allocation was proving to be time consuming.
Source: Business Standard
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