JSW Steel, one of India's largest steelmakers, is aiming to get at least half of its iron ore requirements in Karnataka from captive sources, its deputy managing director Vinod Nowal said.

JSW SteelBSE 0.72 % currently buys iron ore, the key ingredient to make steel, from open market in India and some from abroad as it does not have its own iron ore mines to feed its plants in Karnataka, Maharashtra and Tamil Nadu.

The company will bid for existing but presently closed mines in Karnataka in the impending auction of 'Category C' mines, where most illegal mining happened earlier. It has also put in applications for fresh mining leases in the state.

"We are more interested in Karnataka mines. We get a cost advantage there," said Nowal. "We have a target to have at least 50-60% captive source."

The Sajjan Jindal-led company's Karnataka plant at Vijayanagar is its largest, with a capacity to make 10 million tonnes (mt) of steel every year. The company has a total capacity to make 14.3 mt of steel annually.

JSW Steel suffered severe shortage of iron ore after the Supreme Court banned mining in Karnataka. It has started importing iron ore from South Africa and Canada via sea despite its Karnataka plant being landlocked. JSW Steel needs about 22.5 mt of iron ore annually.

The company expects auctioning mines in Category C to be over by the end of this financial year, and is hopeful that the new government will speed up the process of granting fresh mining leases in the state.

"There are almost 15 applications for fresh mines. But it depends on when the government will give and when it will come to us. If they initiate action in the next 6 months it will take at least two years to start the mines," said Nowal.

No progress has been made yet with the Supreme Court putting a cap of 30 mt on iron ore production annually. If all the mines in Karnataka start operating then there wouldn't be a need for fresh mines.

However, these mines are taking far too long to obtain clearances, leading to scarcity of iron ore. At present, fresh mine applications from various companies are lying with the state government. Kalyani Steel is one of the other companies waiting for new mines. RK Goyal, managing direcror of Kalyani Steel, said the government has not yet moved on the fresh mining leases.