Sail signs MoU for limestone supply
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.
[May 26-June 1, 2008]