Sail's Rs 4000 Cr Potential Windfall: 41 Tonne Of Sub-grade Iron Ore

Steel Authority of India (Sail), India's largest steel maker and second-largest iron ore producer, is sitting on nearly 41 tonne of sub-grade ore worth nearly Rs 4000 crore, the latest records of the company show. The company has plans to capitalise on part of this, which is currently held outside its usual inventory, the sources said.

"There is significant market demand for sub-grade fines and the recent sales price trends are indicative of considerable margins over and above the carrying value of such inventories," SAIL has said in its recent quarterly filings. "The management also has plans to set up beneficiation plant and pellet-making facilities in future that will consume a significant volume of sub-grade fines annually," SAIL further said.

Records show that as of 31 December 2023, the company had a sub-grade iron-ore fines inventory of 41.08 worth Rs 3952.27 crore (valued as of March 2023). The value could be much higher if one goes by the hike in global iron ore prices in the past year. Industry experts are of the view that subgrade ore can be used in Beneficiation/pellet plants and the economic value could be 50 per cent higher than the value currently estimated by Sail

India’s beneficiation industry is about 70-80 million tonne (MT) with most units in Odisha. Sail has been carrying this inventory of sub-grade ore for a few years now.

Since it being a public sector undertaking, it is unlikely to have land issues and the beneficiation plant has an attractive payback period as it enriches the Fe content in the low-grade ore and in turn, improves steelmaking metallics that can save cost.

Sail operates eight iron ore mines and two flux mines spread over Jharkhand, Odisha and Madhya Pradesh to supply Iron ore, Limestones and Dolomite to Sail steel plants in the eastern sector of the country.

Its big competitor is another PSU NMDC, which produced 40 million tons of iron ore last year. Comparatively, Sail produced 35 million tons of iron ore last year and in addition, it is finalising plans to nearly double steel capacity to 34-35 MT by 2030-31 each year from the current levels of around 18 tonne.

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.