Putting an end to the fierce scramble for India’s iron ore resources, the Government has decided to split the Chiria iron ore mines in Jharkhand into two and give at least half the reserves to SAIL for its expansion plans. The other half will be kept for development by the private sector later.

Chiria’s reserves are estimated at 2 billion tonnes and could go up to as much as 3 billion tonnes. This decision was taken recently at a meeting attended by the Jharkhand Chief Secretary AK Basu, Secretary Mines Santha Sheela Nair, SAIL Chairman SK Roongta and senior steel ministry officials.

Asked about the decision, Steel Secretary PK Rastogi said, “The meeting was called to sort out issues related to Chiria mines. There are positive developments from the meeting.”

The decision may come as a blow to the plans of world’s largest steel producer ArcelorMittal, which had virtually threatened to withdraw from the state if it was not given resources from Chiria. Leveraging President’s rule in Jharkhand currently, the government has opted to settle the mining lease in favour of the public sector steel behemoth.

Government sources say the State Government took the decision in favour of SAIL because the world’s largest producer had not made much headway in the project. With this decision, the competition among the private companies such as ArcelorMittal and Jindal’s will turn more intense. Mittal had been seeking 600 million tonnes reserves for his Jharkhand plans.

Also, the iron ore mining and steel production landscape in India is likely to change qualitatively. A planned capacity expansion by the Tata’s in Chhattisgarh and Orissa has already run into land acquisition problems. The Jindal Group which was to set-up plants in Orissa and West Bengal is also learnt to be going slow on the project. So the government says the clash of the domestic steel titans might just be beginning now.

However, SAIL may be unhappy from this development since the company had been seeking control of 2 billion tonnes of reserve. It already has steel-making capacity in Bokaro, Jharkhand. SAIL had earlier expressed its intention to set-up a new unit in Jharkhand, provided it gets control of Chiria.

SAIL has plans to expand capacity to 23 million tonnes from the current 14 million tonnes by 2012. Control over Chiria is vital to current and future expansion plans.

In the previous United Progressive Alliance government, the then Steel Minister Ram Vilas Paswan had sought allocating the explored 2 billion tonne reserves to SAIL and leaving the unexplored reserves for private players. However, the proposal did not materialise.