February 23, 2012: Electrosteel Castings (ECL) has received forest stage-I clearance for its iron ore mines located at Kodolibad, West Singhbhum, Jharkhand, from the Ministry of Forests and Environment (MoEF).

ECL expects to receive stage-II clearance in the coming two to three months and then sign mining lease with the state government. After signing the mining lease, ECL can develop the mine and resume production.

The mine has reserves of 91 million tons with 64% Fe content. ECL expects to commence production from this mine in FY2013.

With upcoming production from coking coal and iron ore, ECL will turn into a fully integrated steelmaker.

Although there is lack of clarity on the timelines for commencement of meaningful production from its coking coal and iron ore mines, ECL's margins are expected to be significantly higher than its peers once it reaches optimum production capacity at its mines, according to analyst reports.

Moreover, ECL's associate, Electrosteel Steels (34.8% stake) with 2.2 million tons of steel capacity is expected to benefit the most, as ECL will supply coking coal and iron ore from its mines to Electrosteel Steels at subsidized rates (cost + 20%).

Source: ISMW