MAC: Mines and Communities

Posco to cut down ore swapping: New technology expected to bring down cost

Published by MAC on 2006-04-18

Posco to cut down ore swapping: New technology expected to bring down cost

Dillip Satapathy/Kolkata/Seoul

18th April 2006

South Korean steel major Posco has decided to significantly bring down the extent of iron ore swapping, the most controversial concession granted to it by the Orissa government, for its $12 billion, 12 million tonne steel project at Paradip.

"We will minimise the extent the iron ore swapping for the Orissa project following a decision to use Finex process instead of blast furnace route to make steel", said Ku Taek Lee, the chief executive officer of Posco.

He, however, asserted that the company may not totally drop this clause in the MoU signed with the state government last June.

Though he declined to mention by what per cent the declared rate of swapping will be brought down, sources said, it could be cut down by half to about 15 per cent to 20 per cent from the present level of 30 per cent when the company goes for final agreement with the state government for the project in near future.

In the MoU, the company had been granted the option of exporting 30 per cent of the iron ore from its allotted resources against import of high quality ore from Brazil.

This had created hue and cry in different circles as critics thought the concession may lead to "unnecessary" depletion of scarce iron ore resources of the country and put the company in an advantageous position vis-ˆÐ¦is domestic steel makers.

Posco, however, justified the clause saying Indian iron ore had high alumina content of over 2.6 per cent which was a hindrance in efficient operation of the blast furnace.

"The blending of Indian ore with imported ore from Brazil, which has only 0.6 alumina content, is necessary for efficient operation our Paradip plant", Lee had asserted during his visit to the state last year.

Meanwhile, the company has made a change in technology selection for its proposed Paradip plant following a detailed feasibility study.

Though Posco had initially thought of going for the blast furnace route, the feasibility study has suggested use of the Finex process, which is now under implementation at Posco's Pohang facility, for the Orissa project, Lee pointed out.

Sources said, the finex process can use ore with alumina content up to 3 per cent without much compromise on operational efficiency.

"The Indian ore is known to contain alumina of about 2.6 per cent. However, we will come to know the exact per cent of alumina in the ore in the mines to be allotted to us after detail examination of the raw material following grant of prospecting licence to us for mining operation", sources said.

In any case, the need of swapping for the Orissa project will come down significantly thanks to the technology switch over.

(The correspondent's trip to Seoul was sponsored by Posco).

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