SAIL-BHP JV likely to take off

NEW DELHI: The proposed joint venture between Steel Authority of India (SAIL) and Australian mining major BHP Billiton may now get a kickstart. The government is likely to amend its iron ore policy that will help such JVs. SAIL has, therefore, sent a team to Australia to scout for coking coal blocks. Now with the team actively in talks with BHP Billiton, leading supplier of coking coal to the steel major, the JV may finally be formed, SAIL sources said.

Earlier, the SAIL-BHP JV was facing problems as state governments were refusing to grant new mining licences. This reluctance from state governments amidst the general debate and review of iron ore policies had been coming in the way of the steel behemoth’s progress on the iron ore mining front. However, this is now expected to change.

“The Planning Commission, in consultation with the Hooda committee, is expected to formulate an iron ore policy keeping in mind the interests of PSUs and industry players. Though the exact details of the policy are difficult to pin-point at present, it will surely be conducive to the growth of steel sector,” sources in the steel ministry said.

Aware that its raw material requirement would shoot up in coming years, the PSU steel giant had signed an MoU with BHP Billiton nearly two years ago to form two JVs—one to acquire coking coal, mostly from mines abroad and another to develop iron ore mines in India. SAIL has plans to raise its hot metal production from the current level of 13 million tonnes (MT) to about 22.5 MT by 2011-12.

This can be possible only through increased volumes of hard coking coal as well as iron ore. To meet this target, JVs with foreign companies was necessary to fulfil its raw-material requirements.

In return for coking coal, BHP Billiton would share its expertise in iron ore mining, including advanced technology for exploration and mining while developing iron ore mines in India jointly with SAIL. About a year ago, SAIL had also made efforts to partner with Coal Videsh to acquire coal blocks abroad.