Mumbai, Aug. 18 -- Coal India Ltd is set to bid for more iron ore mines, depending on whether the blocks are financially viable, as the country's largest coal miner seeks to secure raw material for a planned pelletisation plant, two people familiar with the matter said. The move follows Coal India's emergence earlier this month as the top bidder for the Gadadharpur iron ore block in Odisha, marking its entry into a sector dominated by public-sector peer NMDC Ltd. Coal India will pay the Odisha government a premium equivalent to 114.05% of the value of minerals dispatched from the block, Mint reported on 6 August. A pelletisation plant converts fine iron ore into small, stronger pellets that can be used as a raw material in steelmaking. The Gadadharpur block, spread over 265.05 hectares in Keonjhar district, has estimated resources of about 258.04 million tonnes (mt) of iron ore. Coal India's move is part of a broader government push to increase domestic iron ore production as steelmakers add capacity, the people said. India's National Steel Policy targets steel production of 300 mt a year by 2030 and projects iron ore demand of around 437 mt, up from current demand of 255-260 mt a year. The state-owned miner, which already holds critical mineral blocks, is unlikely to bid aggressively for more iron ore mines and will assess the economic viability of each block before deciding whether to participate in auctions, the people said. Coal India and the ministry of coal did not immediately respond to Mint's queries. Coal India's first iron ore acquisition has already raised questions about whether the economics will work. "Coal India's entry into iron ore mining and pelletization could be challenging from a commercial viability perspective. A mine attracting a 114% premium may not be economically viable, even with pelletization. Given the high premium, the operation would require very high efficiency, with every cost mattering," said Dhruv Goel, chief executive of BigMint, a commodities market intelligence firm. "Coal India's experience has largely been in legacy coal mines, so operating in a highly competitive iron ore environment could prove challenging," he said. However, the move could benefit steelmakers by making raw material supplies more assured, given that the mines would be operated by a state-owned company, Goel added. BigMint estimates that a 1 million tonne per annum pellet plant requires capital expenditure of about Rs.350 crore. Coal India's entry comes as some of India's largest steelmakers have cautioned against paying excessively high premiums for iron ore assets. Top executives at Tata Steel and JSW Steel have in recent months indicated that they would avoid auctions where premiums cross 100%, saying the economics become difficult to justify over the life of a mine....