JSW Steel has gone for a massive production cut to 30% of capacity at its Vijayanagar plant in Karnataka "due to abrupt stoppage of iron ore".
"JSW Steel has been compelled to scale down its production to 30% from Saturday, after the apex court's order directing to sell iron ore produced by NMDC through e-auction by the monitoring committee irrespective of long term contracts," the company said in a statement.
"The abrupt disruption of supplies to JSW Steel [long term customer] by NMDC cut the lifeline to run the furnaces in safe condition," it added.
The Vijayanagar plant has a capacity to produce 10 million tonnes of steel per annum.
The move comes following an apex court order last Friday which said that even supplies of iron ore by state-run NMDC from its mines in Karnataka will be done through e-auction route only.
The apex court order had further said that e-auction will be done for NMDC's iron ore, irrespective of the long-term supplies agreement it has entered into with various steel units in the state.
More From This Section
NMDC is the only company that is allowed to produce iron ore in Karnataka by the apex court, which banned mining due to large scale environmental degradation of the areas.
According to an industry source, the Navratna firm had stopped supplies to JSW Steel on Friday itself, following the order of Supreme Court.
The source added that, at present, the Sajjan Jindal-firm is producing only 9,000-10,000 tonnes of steel from Vijayanagar unit against an installed capacity of 28,000 tonnes per day.
JSW Steel requires about 16,000 tonnes of iron ore per day to run its 10 million tonne per annum Vijayanagar plant.
Pointing out that long-term customers across India, procure iron ore from NMDC directly at the long-term price fixed by the Navratna firm, the JSW statement said sale of the raw material through e-auction will put the steel producers in Karnataka at a disadvantage.