JSW Steel once again becomes largest buyer of NMDC iron ore in Karnataka

After a gap of three months, Sajjan Jindal-led JSW Steel has again become the largest buyer of NMDC iron ore in Karnataka. The steel producer had curtailed its off take from the state-owned miner due to quality issues, saying the price at which the ore was being offered was not justified.

“We had never stopped buying from NMDC. But now we are buying at previous levels,” Seshagiri Rao, joint managing director and group chief financial officer, told Business Standard. Rao said the miner made some price correction and that has translated in cost reduction to some extent, but overall cost continues to remain high. He refrained from quantifying the amount of benefit.

“We have been representing to them that there are problems in overall pricing in Karnataka. So they (NMDC) have done some corrections, but they have a long way to go. We are not okay with the current price levels but there is no option,” said Rao. “We need Karnataka iron ore and it is not possible to source 100 per cent from outside.”

The company was said to be importing iron ore and also buying from Odisha for Rs 4,000-4,500 per tonne, as against from Karnataka for Rs 3,000 per tonne.

 Steel is a long-term buyer of NMDC iron ore and also occasionally buys the raw material for its Dolvi and Salem plants in Maharashtra and Tamil Nadu, respectively.

NMDC produces about 12 million tonnes ore annually from its Donimalai mine in the state. JSW Steel is lifting 60-70 per cent of the ore produced by NMDC to cater to its 12 million tonnes plant at Vijayanagar. 

The company has a total requirement of 21 million tonnes. “Our requirement is not fully met that is why we are buying from outside of Karnataka, too,” Rao said.

Kalyani Steel and Kirloskars are some of the smaller steel manufacturers in Karnataka that lift the auctioned ore from NMDC.

Apart from NMDC, Anil Agarwal-led Vedanta, MSPL and Bellary Iron Ore are some of the other iron ore miners of Karnataka. The total capacity of Karnataka iron ore mines can be extended up to 40-45 million tonnes. In 2016-17 and 2017-18, the state produced 27-28 million tonnes.

“With regard to pricing, we continue to express our issues with them (NMDC) and they (NMDC) are positively considering that,” said Rao of JSW Steel.