 "Odisha's revised ore linkage policy may benefit Tata Steel")
The Odisha government has modified the existing long-term ore linkage policy of its PSU Odisha Mining Corporation (OMC).
After the policy revision, even those companies with captive mining leases can source ore from OMC to meet the shortfall of their end-use plants.
"Companies with captive mine leases can enter into long-term agreement with OMC to meet their raw material requirement subject to the extent of their shortfall”, Odisha chief secretary Aditya Padhi said after a Cabinet meeting.
The modification in long-term ore linkage policy would especially benefit firms like Tata Steel. Tata Steel has already commenced buying of iron ore from OMC. At the latest round of e-auctions, the steel firm has procured more than 90% of the high grade ore offered by OMC from its flagship Daitari mines. OMC had offered 50,000 tonne of iron ore fines with iron content of 62-64%. Tata Steel has no exclusive iron ore mine for the Kalinganagar project. Iron ore requirement for the first phase of the steel plant is pegged at five million tonne per year.
To firm up raw material supplies, Tata Steel has drawn up a plan to invest Rs 2,300 crore on scaling up capacity of its captive mine- Khandabandh iron ore deposits to five million tonne per annum (mtpa). But lack of statutory clearances has impeded the progress of the mine's expansion.
The Khandabandh mines is slated to meet the requirement of the Kalinganagar project for three to four years. As Tata Steel looks to expand steel capacity beyond three mtpa, it needs more mines to feed the plant.
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The revised ore linkage policy would also allow to export surplus iron ore. But, exports of iron ore were not lucrative due to the prevailing 30% duty on high grade iron ore.
"We have written to the Government of India to remove the 30% export duty on iron ore. This will help boost exports of surplus high grade ore since there is a glut in the domestic market”, said Padhi.
The Cabinet also approved the formation of Odisha Mineral Exploration Corporation as 100% subsidiary of OMC. The company formed to speed up exploratory work of mineral blocks, would have an authorised capital of Rs 20 crore and initial paid-up capital of Rs 5 crore.