 "Three pellet plants in Odisha may shut down on sluggish demand")
They said, the recent imposition of five per cent export duty on pellet has exacerbated the situation. “The new levy has led to a situation where three units in Orissa are likely to shut down by March end, 2014. This is expected to render 10,000 people jobless as well as lead to significant loss to the exchequer in terms of excise duty revenue,” said S K Chatterjee, Secretary with PMAI.
Odisha has about 24 million tonne per year installed pellet making capacity, out of nearly 80 million tonne total capacity of India.
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However, the state produced only 6 million tonne pellets per annum (mtpa) due to limited supply and high domestic price of iron ore. The pellet production in the state is likely to drop to 3 million tonne once the three pellet plants shut down their facilities.
Though PMAI did not name any company, which is planning to shut down, sources said MSP Metaliks, Brahmani River Pellet Ltd (BRPL) and Essar Steel are likely to shut down their units in Odisha due to poor demand of pellet. Combinedly, these companies are producing nearly three million tonne at present.
However, officials of BRPL and Essar denied shutdown plans though they admitted drop in rates of pellets, post the duty announcement of 5 per cent on exports.
“BRPL has not made any export deal in February. The rates which were hovering above $140 a tonne at Paradip port, have now come down below $140,” said a senior official of BRPL. In order to promote value addition of minerals, the Union government had encouraged investments in beneficiation and pelletisation plants by reducing customs duty on import of pellet making equipment from 7.5 per cent to 2.5 per cent in the 2011-12 budget.
Following this, investors had committed about Rs 35,000 crore to increase pellet capacity in India — from 23 million tonnes (mt) to 80 mt in FY14, said PMAI. The capacity was further expected to go up to 120 mt by FY16.
“It is now clearly upto the government to rollback the duty and thus help to save the industry. The Ministry of Commerce as per media reports has taken up strongly with the Union Finance Minister thrice in last one month stating that the imposition of export duty on a manufactured value added product will be detrimental to the economy,” said Chatterjee in a statement.
Out of the 85 million tons per annum (mtpa) of iron ore pellets production that has been sanctioned in India, about 64 mtpa was to come up in Odisha. Of this, about 26.4 mtpa capacity has already implemented with another 22 mtpa in the pipeline. The balance 16 mtpa is expected to be added later.