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PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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JUSTIFICATION AND ECONOMIC VIABILITY REPORT OF RASULI IRON ORE DEPOSIT
M/s NAVBHARAT FUSE CO LTD.
M/s Navbharat Fuse Co Ltd is a sponge iron producing outfit with its plant in Raykot 30 km away
from Jagdalpur on NH-16 having capacity of 300000 TPA at present and the existing capacity is
being planned to enhance to 4.0 million tonnes / annum. The applied area is required for the
Captive purpose of the applicant.
The proposed area is located in the Jurisdiction of Forest Range of Bhanupratapur Division, Kanker
District.
M/s Navbharat Fuse Co Ltd has been granted PL of the area by the State Govt order no F 3-
115/2003/12 Raipur dated 18.07.2006 and carried out prospecting operations in the area.
The proposed area was prospected by diamond core drilling which was permitted by forest
authority to obtain sub-surface information in the area. However, even for core drilling there was
further condition imposed by forest department, that the bore hole must be closed after sample has
been taken from the core. The initial prospecting has been carried out in the area which has
established a good deposit of Iron Ore.
M/s Navbharat Fuse Co Ltd has applied for the Grant of Mining Lease for 30 years and letter of
intention issued by the State Government
Geological mapping of the area has indicated the presence of major litho units, namely Iron Ore
Formation, BHQ, Phyllite and Ferruginous Shale. On the basis of geological mapping and the data
obtained from drilling of six boreholes the following sequence of formation has been established for
the area:
∼ Laterite
∼ Iron Ore Formation
∼ Banded Hematite Quartzite (BHQ)
∼ Phyllite / Ferruginous Shale
∼ Granite Gneiss
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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IRON ORE FORMATIONS:
It occurs in the form of lenticular bodies at the lower slopes on the southern side of the hill. The
main Iron ore bodies are exposed on the top of the hill showing broad lenticular shape with more or
less E-W alignment. High grade Iron Ore Float is seen on the slopes and its concentration is more
towards the central portion of the slope. In all, Six Iron Ore Bodies namely, A, B, C, D, E and F have
been demarcated
Out of these six ore bodies, two ore bodies i.e. C and B are major and the remaining four bodies’ i.e
A, D, E and F are smaller in dimension.
The details of the Iron Ore Bodies are provided in the following table:
S. No Ore Body Dimensions of Ore Body
BH No Thickness of
Ore Zone (m) Length (m) Width (m)
1 A 175 90 5 36.0
2 B 225 70 3 40.0
3 C 150 75 2 38.0
4 D 125 75 6 40.0
5 E 100 50 4 35.0
6 F 125 75 1 40.0
7 G 280 130 Exposed upto
40m 40.0
In addition to in-situ Iron Ore Bodies 5 float ore zones namely G, H, I, J and K has been demarcated
during the geological mapping. A brief description of these float ore zone is as follows:
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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S. No Float Ore Zone Dimensions of Float Ore Zone (m) Depth Assured
(m) Length Width
1 G 225 100 2.5
2 H 220 125 2.5
3 I 600 190 2.5
4 J 450 175 2.5
5 K 200 150 2.5
Summary of Proved and Probable Reserves of Iron Ore
Category of
Reserves
In Situ Reserves (million
tonnes)
Recoverable Reserves (million
tonnes)
Probable (122) 9.028 7.222
Resources (332) 2.019 1.615
Total 11.047 8.837
(As per PL Report and field observations including new ore body “G”)
Recoverable Reserves of Reef Ore & Float Ore
A summary of recoverable reserves i.e., reef ore and float ore under ‘proved’ and ‘probable’
categories is given below.
Reserves in million tonnes
Category of Reserves Reserves of Reef Ore Reserves of Float ore Total
Proved (111) - 0.38 0.38
Probable & Resources 8.837 - 8.837
Total 8.837 0.38 9.217
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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The carried out exploration gives enough reserves for carrying out mining operations upto 45000
TPA from first five years. It is proposed to drill more number of boreholes in the seven identified
ore bodies so that the delineation of the ore body will be more specific and depth continuity will be
well established
Due to restriction of 1980 Forest Conservation Act, exploration of iron ore in the PL are has not
been carried out as per UNFC Norms. After getting forest clearance for mining lease detailed
exploration will be carried out in the first two year of plan period and reserves will be assessed as
per UNFC classification
CAPITAL INVESTMENT
Budget for proposed mining (Capital)
Activities Area of investment Method of
calculation Basics
Expenses (in
Rs.)
Capital Investment
i Land 52,80,00,000
a. Land cost expenditure
Rs 10 lakh/ha. for
forest land + CA
4.5
lakhs/ha+LAND
COST (Rs 5 lakhs
for 440 ha)
Area: 220ha.
(FOREST) land 52,80,00,000
b. Cost on relief and
rehabilitation action plan
Rehabilitation not
required 0
c. Compensation to the land
oustees No land oustees 0
d. Cost of acquiring Surface
Rights 0
ii. Mining 2,00,00,000
a. Cost for infrastructure &
equipments 2,00,00,000
iii. Environmental Protection 26,56,250
a. Pollution Control (check dam, gully plug, retention wall, settling
tank, water tanker, etc.) 26,56,250
Check Dams 2 Nos. (15 m X 2.5
m X 1.5 m)
@ Rs. 2000/- per
cum 2,25,000
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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Gully Plugs 2 Nos. (5 m X 1.5
m X 1.5 m)
@ Rs. 500/- per
cum 11,250
Retention Wall 140 m X 3 m X 2
m
@ Rs. 500/- per
cum 4,20,000
Water Tanker 2 No. 20,00,000
iv. Socio-economic Development 10,70,000
a. Infrastructure development (Edu., Medical, etc) 10,00,000
i Educational facilities
Rs.2 lakh per
village X within 2
km radius from
project site
No. of Village : 2 4,00,000
ii Medical facilities
Rs.2 lakh per
village X within 2
km radius from
project site
No. of Village : 2 4,00,000
iii Others
Rs.1 lakh per
village X within 2
km radius from
project site
No. of Village : 2 2,00,000
b. Income Generation
Activities
Rs. 500 per head
X unemployed
population of
nearest village
No. of unemployed
population :140(as
per census 2011)
70,000
v. Occupational Health & Safety 5,00,000
a. Infrastructure & PPEs 5,00,000
Total Capital Investment 55,22,26,250
Say Rs. 55.22 Crores
ANNUAL RECURRING EXPENSES
Budget for proposed mining (Recurring)
Activities Area of investment Method of
calculation Basics
Expenses
(in Rs.)
Cost per
ton (in
Rs.)
Recurring Expenditure
i. Mining 661.33
a.
Expenditure for
infrastructure and
equipment
maintenance
3% of direct
investment for
infrastructure &
maintenance
6,00,000 13.33
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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b. Salaries & Wages of
210 staffs
No. of workers
(210) X Wages
Rs. 8000 per
month 2,01,60,000 448.00
c. Royalty on Mineral &
Miscellaneous Exp Rs. 100 per ton 100.00
d. Ore transportation
cost Rs. Per Ton Rs.100 per ton 100.00
ii. Socioeconomic Development 34.88
a. Crop Damage
Compensation*
Rs. 2/sq. mt. X
Agricultural
area within
2km radius
Agricultural
Area : 20000
sq.mt.#
40,000 0.89
b. Corporate Social
Responsibility
Total
production X
Revenue per
ton X 2%
53,10,000 26.55
c. Income Generation
Activities
Rs. 250 per
head X
unemployed
population of
nearest village
No. of
unemployed
population : 140
(as per census
2001)
35,000 0.78
d. Community Health
checkup
Rs. 0.3 lakh per
village X
Affected village
due to this
mining
Anticipated No.
of Village : 10 3,00,000 6.67
iii Occupational Health and Safety 25.81
a. For routine checkup
210 Persons X
budget per
annum
Budget
Rs.4000/- per
annum
8,40,000 18.67
b. Medical aid as under
ESI scheme
1.7% of basic
salary /
employee
Basic salary Rs.
4000/PM 1,71,360 3.81
c. Budget for training 0.5 lakh//year 50,000 1.11
d. Compansation for
accident and injuries
Rs 50000 X
Anticipated
rate of injuries
(No. of
workers)
Anticipated rate
of injury : 5% 1,00,000 2.22
iv. Environment
Management 38.80
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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a.
Maintenance of
Pollution Control
Facilities
10 % of capital
investment 2,46,175 5.47
b. Dust Suppression &
Pollution Control 10,00,000 22.22
c. Environmental
Monitoring 5,00,000 11.11
d. Environmental
division 0
Total Recurring Expenditure 760.83
761.00
* Minimum Rs. 0.6/sq.mt. and maximum Rs. 2.0/sq. mt. is the damage compensation criteria as per
local govt. rules
# Agricultural Area considering 50m each side of approach road maximum up 2 km distance to
reach PWD road for crop damage compensation :
COMMERCIAL AND FINANCIAL ANALYSIS
Internal Rate of Return (IRR) Analysis
Internal rate of analysis is given in Table-1.
Considering working cost as Rs 761/ton and revenue of Rs 5900/ton of ore
Table 1: IRR Analysis
Year Production
Expenditure (Rs.)
Revenue Net Cash Flow Capital Cost Working Cost
1 55,22,26,250 (55,22,26,250.00)
2 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
3 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
4 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
5 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
6 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
7 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
8 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
9 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
10 45000.00 3,42,45,000 26,55,00,000 23,12,55,000
IRR 40%
PROJECT JUSTIFICATION & FEASIBILITY: Rasuli Iron Ore Deposit . 2014
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Risk Analysis (At 30% Revenue Crash)
Risk analysis of the project is given in Table-2.
Table-2 Risk Analysis
Year Production
Expenditure (Rs.)
Revenue (Rs.) Net Cash Flow (Rs.) Capital Cost Working Cost
1 55,22,26,250.00 (55,22,26,250.00)
2 45,000 3,42,45,000 18,58,50,000 15,16,05,000
3 45,000 3,42,45,000 18,58,50,000 15,16,05,000
4 45,000 3,42,45,000 18,58,50,000 15,16,05,000
5 45,000 3,42,45,000 18,58,50,000 15,16,05,000
6 45,000 3,42,45,000 18,58,50,000 15,16,05,000
7 45,000 3,42,45,000 18,58,50,000 15,16,05,000
8 45,000 3,42,45,000 18,58,50,000 15,16,05,000
9 45,000 3,42,45,000 18,58,50,000 15,16,05,000
10 45,000 3,42,45,000 18,58,50,000 15,16,05,000
IRR 23%
Capital investment for Mining and Environmental Management (Equipment, Environmental
Control, Social Development, etc.) : Rs. 55.20 Crores
Consideration of per ton working cost as on date is given below:
Recurring Cost (Rs. /MT)
Expenditure on cost of mining : Rs. 661.33
Expenditure for socioeconomic development : Rs. 34.88
Expenditure for Occupational Health and Safety : Rs 25.81
Expenditure for Environmental Management : Rs. 39.24
Total : Rs. 761.26
Value of Mineral : Rs. 5900
Based on the above calculations the IRR at 30% revenue crash was observed to be 23%
which makes the project viable.
Benefit Cost Ratio @ 10% 2.04
Benefit Cost Ratio @ 15% 1.77
NPV @ 10% 779,576,802.63
NPV @ 15% 551,226,389.36
