India?s GJR to explore iron ore project in Sumatra

Indian Mining and steel firm Gala Janardhan Reddy (GJR) group has entered into a strategic alliance with PT Earthstone Resources of Indonesia to source iron ore from Sumatra mines for its greenfield integrated steel plant in Andhra Pradesh and export markets, The Business Standard of India reported Monday.

GJR said that it has plans to acquire 50 percent economic interest in project tenement located near the village of Nalo Baru, Jambi province. With an area of 438 hectares, the mine has estimated reserves of 100 million tons of high grade iron ore. As part of the agreement, GJR will invest about $30 million (Rs 120 crore) in mine development.

According to a GJR release, the estimated sale value of the iron ore deposits in the Indonesian project is $10 billion (Rs 40,000 crore). The mining work will commence in October this year with an initial production target of 3 million tons per annum.

"In the first phase, we are setting up a 2.5 million TPA plant at Rs.70 billion. The modular plant will be expanded in phases to 10 million TPA by 2014. We will bring about four million tonnes of iron ore from Sumatra by ship from Teluk Bayur port to Chennai port and by rail wagons to the plant site (240km) for captive use," Reddy said.

Till the plant goes on stream in 2010, the mined iron ore will be exported to China, Japan, Korea and other markets where the demand for high-grade ore is high.

Production of iron ore at Nalo Baru is set to commence from October after the US-based John T Boyd Co completes tenement, mining plan and reserve estimation study by September. (*)