Rashtriya Ispat Nigam Ltd (RINL), which doubled its production capacity to about 7.2 million tonne per annum last fiscal, is facing a key challenge of raw material insecurity as it doesnt own any iron ore mine.

P.K. Rath, who had recently taking over as RINLs Chairman-cum-Managing Director, said they had come to an understanding with the Odisha Mining Corporation Ltd. (OMC) for getting iron ore from Gandhamardhan hills of western Odisha.

Mr. Rath said iron ore would be brought by train up to Paradeep and by ship from there to the Gangavaram port located on the VSPs backyard. "The ore, which is of low grade and available in plenty, will be blended and used to meet a part of the requirement of RINL," he said. The company, which had clocked a turnover of Rs.16,625 crore during the last fiscal, has set a target to produce six million tonne with a sales volume of 5.5 million tonne during 2018-19.

The Navratna company has long-term agreement for ore supply from Bailadilla mines of the National Mineral Development Corporation. RINL is the only major steel-maker without captive mines, forcing it to spend more on production.

RINL has invested Rs.360 crore nearly seven years ago to have strategic control over the Orissa Minerals Development Company. Though it has become a subsidiary of RINL, the leases of six blocks have expired and the Supreme Court has imposed a penalty of about Rs.1,500 crore for extracting the mineral violating norms before the OMDC was acquired by RINL.

Mr. Rath said RINL had obtained the board approval for a joint venture with the A.P. Mineral Development Corporation to extract iron ore from Kukunoor in West Godavari. "The file is pending before the NITI Aayog. Once the clearances are obtained, mining will begin," he said. The CMD said the focus would be on cost reduction, quality control and increasing the production. The company has been trying for market penetration, mainly in the rural areas, and enhancing its brand image by a series of initiatives.

RINL recently increased its capacity from 6.3 million tonne to 7.3 million by undertaking capital repairs of blast furnaces by administering pulverised chemical injection. To increase the capacity from 6.3 million tonne to 7.3 million tonne, the company had spent around Rs.4,000 crore.