The Rajasthan government offered the letter of intent (LoI) to state-owned RINL, which is also called Vizag Steel, to develop low-grade iron ore mines in Bhilwara district.
The mine, which is spread over 900 hectare and with an expected reserve of 230 million tonne, would be the first captive mine for RINL. So far, the firm sourced iron ore from NMDC.
RINL, which has a production capacity of 6 million tonne per annum, has captive limestone, dolomite and manganese mines.
Currently, the company does not have plans to acquire mines overseas.
With this mine, the company plans to reduce its dependence on imported iron ore and thereby protect its margins from a volatile rupee. The firm expects turnaround to happen in the next one to two year.
The firm expects that the global economic condition would improve soon on the back of reduced unemployment in the US and stability in Europe and this would revive demand for steel.