PSU giant RINL gets iron-ore boost with BGC merger

Fortune seems to be finally smiling on iron ore-starved state-run behemoth Rashtriya Ispat Nigam Limited RINL with the steel ministry deciding to merge the Bird Group of Companies BGC with it. One of the BGC companies, Orissa Mining Development Corporation, has an estimated ore reserve of over 200 million tonne, which would give the PSU much-needed raw material security for its expansion plans. The steel ministry is likely to seek the union cabinet8217;s approval on the same

8220;After a detail scrutiny of the reasons behind RINL8217;s shooting production costs, we have realised that the PSU is in dire need of raw material security. Since restructuring efforts for the BGC is on, we have decided that BGC including OMDC be merged with RINL soon after restructuring of BGC is over. It is expected that the PSU will manage it well and ensure its total turnaround,8221; steel secretary Pramod Kumar Rastogi told The Indian Express. Elated at the prospect of having iron ore security, RINL chairman and managing director P K Bishnoi said, 8220;Going by the fact that commercial sourcing raw material is ripping through our bottomline, we feel elated at this prospect as this would definitely give us the much-needed captive raw material security. This will also go a long way to contain rising production costs and provide further fillip to our expansion plans.8221; Bishnoi said RINL formerly known as Vizag Steel would diligently carry out modernisation of the existing operations of the OMDC and its sister companies of BGC. Though he did not specify as to how much investment would be required to revamp BGC8217;s operations, but informed sources said, at least Rs 500 crores would be needed for the same. The steel ministry is likely to seek approval of the union cabinet on the same.

A Parliamentary Consultative Committee had expressed the need to ensure availability of critical raw materials like iron ore and coking coal for both present as well as post-expansion needs of steel PSUs. RINL8217;s expansion plan involves a capital outlay of Rs 8,692 crore to raise its steel production capacity to 6.3 MT from the current level of 3.4 MT. OMDC was incorporated in 1918 and its authorised share capital is Rs 0.60 crore.

Its mines are located around Barbil in Orissa and is one of the oldest iron ore mining companies having reserves of over 200 million tones of ore which is expected to service RINL8217;s needs at least for the next 15 years. OMDC ventured into export of iron ore fines from 2005-06 and earned good amount of foreign exchange. The BGC has seven companies in its fold.