State-owned Steel Authority of India Limited (SAIL) has outlined plans to invest INR102.84bn ($1.9bn) to double its iron ore production capacity.

The company intends to enhance capacity at its captive iron ore mines to 45 million tonnes by 2016 and 56 million tonnes by 2020.

SAIL currently has a maximum iron ore production capacity of 29 million tonnes per annum.

The capacity expansion supports the company’s long-term plans to increase its steel production levels from the current 13.82 million tonnes to 23.46 million tonnes.

Around INR35bn ($647m) will be invested at the company’s Rowghat mines in Chhatisgarh, while INR30bn ($555m) will be spent at the Gua mines in Jharkhand.

The Rowghat mines have faced Maoist threats but are a key for the company as it serves the captive needs of its Bhilai Steel Plant.

SAIL chairman C S Verma told The Economic Times that the government will deploy a huge security reinforcement to tackle the threat in the region.

"The deployment has already started and we hope to start production within the next two to three years. To start with, Rowghat will produce 7Mt of ore which is slated to go up to 15Mt," Verma noted.

Verma said that the company has decided to employ a mine developer and contractor (MDO) for the mines due to the scale of operations, while also enlisting invitations for global bids.

"SAIL is spending some Rs72,000 crore on expansion and modernisation of its plants. Post expansion, SAIL would require 39Mt of iron ore," Verma explained.

NRI Energy Technology