SAIL has accumulated a massive 42 million tonnes of sub-grade ore

With sub-grade iron ore fines inventory piling up, state-owned Steel Authority of India (SAIL) is looking to set up a beneficiation plant to consume the ore generated by its mines in future. As on March 31, 2021, the company is sitting on total 42.60 million tonne sub-grade iron ore fines and has been able to sell a meager 0.40 million tonne during the year.

Sub-grade iron ore fines sold outside of mining leased area attracts royalty for the seller making the dispatch costly. Due to this, instead of selling outside, it makes more sense (for the company) to set up a beneficiation plant in the mining lease area and consume it in-house.  In the mining industry, beneficiation is any process that improves the economic value of the ore, which results in a higher grade product (ore concentrate) and a waste stream (tailings).

SAIL’s sub-grade ore inventory has grown to this size over several years now. Use of low iron content of these fines is unsuitable for consumption in the steel plants of the company. At the same time, Government notification dated September 2012 prevented all captive miners (including SAIL) from selling these fines in the market.

In fact, since the ore did not have any economic value, no value was assigned to the fines until 2018-19, said SAIL last week in earnings release.

Though the plan to set up the beneficiation plant is in the offing, the company has chalked out a detailed plan to sell the existing inventory considering the significant volume. The management has made a detailed assessment of volumes that are expected to be sold within 12 months from end of FY21 and has accordingly classified as non-current. 

India’s beneficiation industry is about 70-80 million tonne with most units in Odisha. Usually, iron ore of 55-58 grade ferrous content are used for beneficiation. Any ore grade below 55-fe though can be beneficiated works out to be expensive and in turn is economically unviable.

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