Stifled by poor iron ore supply amid high rates, steel companies in the state are planning to lay off workers at their plants.
"We have taken this decision as a desperate measure and will soon inform our labour force, leaders of labour unions about the impending lay off,” said PL Kandoi, president of All Odisha Steel Federation (AOSF), an association of nearly 300 steel makers.
It may be noted the steel sector in the state has generated an overall employment for 75,681 people which includes direct employment for 23361 persons and indirect employment opportunities for 52320 others.
The association has been complaining to state government about the unviability of the steel plants in the state due to non-supply of iron ore by the state-owned Orissa Mining Corporation (OMC) to them at reasonable rate.
The raw material scarcity has been further accentuated following the government decision to temporarily suspend the operation of the state-run mines.
"The government has shut down Gandhamardana mine for 20 months just because they wanted to cleal the iron ore fines stashed there. Similarly, Daitary mine has been shut down as their dumping yard area was coming under forest land.
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The dumping yard has been in use for past few years, but why the government took action this year? “ Kandoi asked.
Gandamardana mine produced 0.2 million tonne iron ore per month while Daitary mine’s capacity was 0.5 million tonne iron ore a month.
The association said they were unable to make profit as limited supply of iron ore has boosted rates by almost 10 per cent from a month ago, which was anyway three times higher than rates prevailing three years back.
Currently high grade iron ore at key mines is trading around Rs 2,450 per tonne.
Referring to a letter written by Naveen Patnaik to the Prime Minister about imposing 50 per cent tax on mining profit, Kandoi said, AOSF welcomed the decision but at the same time urged the state government to not to curb production.
"Our appeal to the government is do not curb production, but put a cap on pricing. Our proposal has got positive response from government officials but we are yet to see any result in this regard,” he said.
The AOSF said, the government must stop taking ad-hoc decisions that hurt the growth of business. It said, the government should give the miners time to take corrective action and not force them to immediately shut down their mines after detection of violation of any environmental or mining laws.