ArcelorMittal seeks coal blocks in Jharkhand

MUMBAI: ArcelorMittal, the world’s largest steel company by capacity, has applied for two coal blocks in Jharkhand, where it plans to build a 12 mt steel plant at Rs 43,000 crore. The interest in blocks suggests the steel major is still serious about its project in the state.

Delay in allocating iron ore mines had prompted ArcelorMittal to announce a steel project of similar size in Orissa. However, it is believed that Jharkhand may have given fresh assurance to ArcelorMittal on ore supply, prompting it to boost its efforts for the next key ingredient, coal.

“We have applied for two coal blocks in Jharkhand and three in Orissa. They would be for our captive power projects that will come up along with the steel plants,” ArcelorMittal India head Sanak Mishra told ET.

Like the Jharkhand steel project, ArcelorMittal is also planning a 12 mt plant in Orissa. The company also plans to build a 1,500 mw power plant both states. The power plants will use coal to generate power.

Senior ArcelorMittal executives are currently in Ranchi, Jharkhand to step up efforts to get linkages. Although it couldn’t be confirmed, it is learnt that the company is pitching for blocks with combined reserves of 120 mt, which would make it one of the largest coal blocks ever offered to a private company.
ArcelorMittal is believed to have applied for coal blocks near Chiria iron ore mines, which will make it easier to build a steel project with both raw materials close by.

The steel major has been keen on ore from Chiria, owned by its rival and India’s largest steelmaker SAIL. Unconfirmed reports suggest that SAIL and the state have come to a settlement wherein SAIL will offer part of Chiria reserves for ArcelorMittal’s steel project.

Chiria, one of world’s largest ore mines with high quality iron, has around 2,400 mt reserves. Coal supply has been a major hurdle for steel projects as the quality of coal available in the country has high ash content that increases production costs. It is for this reason that most Indian steel companies including SAIL, import coal from Australia.

However, the coal available in Jharkhand is reported to have relatively low ash content.