OMC open to long-term linkage pact with JSW Steel

JSW Steel's proposed 10 million tonne steel project in Odisha has moved a step ahead with the state run miner Odisha Mining Corporation (OMC) keen to have a long-term iron ore pact with the steel company.

In its proposal, the company has pitched for a long-term agreement for 50 years with state owned OMC to supply 30 million tonne per annum of iron ore fines at IBM (Indian Bureau of Mines) declared price. JSW Steel has suggested that OMC may engage a Mine Developer cum Operator (MDO) on a long-term basis to develop its large mines like Gandhamardhan and Dubuna. The objective is to secure the long-term iron ore supplies for the steel plant.

"We already have the long-term linkage policy as approved by the government. We will be processing the JSW requirement accordingly," said a senior Odisha government official.

Usually, OMC signs long-term linkage pact with its iron ore consuming industries for five years. In Odisha, Essar Steel, Visa Steel, Jindal Steel & Power Ltd (JSPL), Bhushan Steel Ltd and MMTC promoted Neelachal Ispat Nigam Ltd (NINL) are amongst the steel industries buying iron ore from OMC through long-term linkage.

Tata Steel is also examining the possibility of clinching a long-term pact with OMC to secure iron ore for its Kalinganagar plant. On a trial basis, the steel maker has signed an agreement with OMC valid for one year.

OMC currently produces around six million tonnes of iron ore annually. It has plans to ramp up output to 20 million tonnes per annum over the next three to four years through increased mechanization of its key mines.

Sajjan Jindal-led JSW Steel has pledged an investment of Rs 50,000 crore on the Odisha steel plant and associated facilities. The company has asked for 4,500 acres of land for the integrated steel project to be set up close to Paradip.

Although the state government officially maintains that the site for JSW's steel project is not zeroed in, the company has clearly asked for the land where Posco project was supposed to come up. JSW Steel has asked for 2700 acres of land that has already been acquired for the Posco project. The company desires that this patch of land should be transferred by the state government after constructing the boundary wall. Aside from the steel plant, the company has asked for around 150 acres of land for the township and 90 acres for rehabilitation & resettlement (R&R) colony. The steel company has urged the state government to transfer all the land parcels at the rate of Rs four lakh per acre.

To optimise raw material costs, JSW Steel has committed an investment of Rs 3,700 crore on a slurry pipeline for transporting 30 million tonnes of iron ore each year from Joda to Paradip. Both the steel project and the slurry pipeline have been approved by the High-Level Clearance Authority (HLCA), the highest body to clear investments in Odisha.