Steel Authority of India Ltd has signed a memorandum of understanding with Rajasthan State Mines & Minerals Ltd for long-term supply of low-silica limestone, a critical input in steel making. RSMML, owned by the Rajasthan government, is the largest supplier of low-silica limestone for steel making in the country.
The MoU will ensure security of supply to Sail for 10 years starting from 2008-09 when it would supply 2.1 million tonnes of limestone. By 2017-18, this is expected to rise to 4.4 million tonnes in keeping with Sail's capacity expansion programme. Industry estimates suggest that primary producers normally need 80 kg of limestone to produce one tonne of steel.
Speaking to Projectmonitor, a senior official at RSMML's limestone SBU in Jodhpur said that the company in 2007-08 supplied 2.15 million tonnes of low-silica grade limestone to the steel industry. Sail that was supplied 1.5 million tonnes was by far the largest purchaser followed by Tata Steel which took up 0.45 million tonnes that year. Other producers like Jindal and Essar were supplied around 0.15 million tonnes. RSMML's current limestone capacity is around 2.5-3.0 million tonnes with 25 per cent production sold in the open market.
In view of the committed offtake, RSMML is also likely to take up significant capacity expansions. The official said that at Jodhpur two new mining and crushing units would be set up. RSMML is also talking to the Indian Railways to extend railway lines closer to the mines to cut down transportation costs.
Sail's total saleable steel capacity is expected to rise to 26 million tpa from the current 14.6 million tpa by 2010, on account of expansions at the four integrated steel plants and the Iisco Steel Plant. Meanwhile, India's total crude steel production grew by 6 per cent to reach 53.904 million tonnes in 2007-08 from 50.817 million tonnes in 2006-07.