ArcelorMittal withdraws application for Bellary ore lease

Steel giant cites low iron content in mines; move casts shadow on GIM-II

At a time when the State government is preparing for the second edition of Global Investors’ Meet (GIM), it has come to light that the world’s largest steel manufacturer ArcelorMittal has withdrawn its application seeking iron ore mining lease at Donimalai forest range in Bellary, citing inferior ore quality.

In a letter to the Department Industries and Commerce last June, the company said the exploratory works had revealed that the area did not have any significant mineral resources and hence, it was not economically feasible to have captive mines there.

“We undertook an exploratory programme within the allotted area and substantial area was explored. The exploration has revealed that the area is devoid of any significant mineralisation. It mainly has Banded Hematite Quartzite with lower Fe (Iron) content of about 30 per cent to 38 per cent. So, we would like to withdraw the application seeking mining lease,” the company said.

Govt’s worry

But what has caused concern for the government is that the firm - which has signed an MoU with the government to set up a Rs 30,000-crore steel plant (capacity six million tonnes per annum) at Kudatini in Bellary - has so far not submitted a fresh application seeking alternative mining lease.

The State government had, in 2010, recommended to the Centre to allot 211.24 hectares of mining lease in Donimalai range as per its commitment to provide captive mine to the company’s mega steel project. The government had left no stone unturned to woo the steel giant to the State. Of the 38 MoUs signed by the government for setting up iron and steel industries at the GIM in 2010 (GIM-I), ArcelorMittal was the first company to receive the letter of intent from the government promising mining lease (captive mines). ArcelorMittal’s decision, sources said, is likely to cause embarrassment to the government which is wooing investors in a big way for GIM-II, scheduled to be held on June 7 and 8 this year.

At the same time, the process to acquire 4,864 acres of land for the company’s steel plant has made significant progress. About 4,000 acres of land has already been acquired at Kudatini in Bellary and Karnataka Industrial Area Development Board (KIADB) is ready to hand over 3,000 acres to the company. The firm had deposited about Rs 268 crore with KIADB for the purpose.

When contacted, Industries Minister Murugesh Nirani said he was not aware of the company’s decision to withdraw the application. The Mines portfolio comes under the chief minister.

“As far as the project is concerned, it is very much on. KIADB is ready to hand over the land to the company,” he said.

Asked when the company would commence project implementation, he said he was not aware of it.

Project delay

According to official sources, the company’s decision to withdraw the application would delay the project implementation as the process of mining lease allotment has to be started all over again. It is a cumbersome process. The company has to be submit a fresh application and the department has to conduct hearing on it, before recommending to the Centre to allot mines.

Presently, the State government is neither receiving nor processing any application seeking mining leases as there is a blanket ban on iron ore mining in the State.

Besides, the Centre is contemplating to bring in a new and transparent system of mining to prevent illegal extraction of mineral resources, sources said. Allotment of captive mines is one of the company’s conditions to open its steel mill in the State.  

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