Burdened by high iron ore cost and recent hike in power tariff, steel makers of Orissa have threatened to shut down their plants if the state government does not intervene to resolve their problems.
“We are completely frustrated and we do not have any option but to shut down our plants if the government does not take any action,” said P L Kandoi, president of All Odisha Steel Federation (AOSF) at a press meet here.
Kandoi said, the promoters of these steel plants were assured to get access to iron ore mine, coal blocks and cheaper power by the state government when they came to set up their units in the state. But following allegations of large scale irregularities in mining operation, the government has slapped restrictions on raising and movement of iron ore leading to constraints in availability of ore for the steel plants.
Though the state government has asked Orissa Mining Corporation (OMC) to reserve 70 per cent of its iron ore output for domestic steel units, the price at which OMC sells this raw material is prohibitive, he complained.
“The raising cost of iron ore is meager Rs. 500 per tonne, but the mine owners (including public sector OMC) are selling it at Rs. 4,000 per tonne. They have been successful in manipulating the tender rates of OMC by artificially inflating the benchmark rates,” a press release of AOSF said.
Most of the iron ore produced in the state are exported to China. To discourage exports, the Union government has decided to impose 20 per cent duty on exports from next April 1. But the steel makers are not impressed.
“The importers in China will not hesitate to buy iron ore at extra cost if they want to run their plants. Besides, the spot rates are not influenced by international demand. The mine owners have formed a cartel and are dictating the price,” said Kandoi.
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The steel makers’ body, which represents 300 small and large plants across the state, has asked the state government to provide a US-style bailout package to protect the livelihood of over two lakh employees engaged in these plants.
The steel federation also protested the recent hike in power tariff in the state describing it as ‘another nail in our coffin’ and said it would raise cost of production significantly.
“The price of finished steel products will go up by Rs 2,000 per tonne and that of ferro alloys will shoot up by Rs. 4,000 per tonne if the new tariff rates come into effect. The current power tariff is much higher than neighbouing states”, pointed out an official of AOSF.