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Naveen Jindal owned, Jindal Steel and Power Ltd (JSPL) is considering to import iron ore to run its 2.5 million tonne per annum (MTPA) integrated steel plant at Angul in Odisha due raw material sourcing problems in the state.
"We are planning to import iron ore (to run our Angul plant). It is unfortunate that we have to do so despite being located in a raw material rich state. The state government must take steps to boost output, otherwise the high cost of ore will affect all steel projects," Jindal, chairman, JSPL, after meeting chief minister Naveen Patnaik and chief secretary G C Pati here.
This is the third meeting of Jindal with state officials since May this year, as its steel and pellet making units have been facing raw material supply issues after the Odisha government suspended operation of its regular supplier, Sarada Mines.
In April this year, the state steel and mines department had ordered suspension of work at Thakurani-B mines, belonging to Sarada Mines Private Ltd, citing unavailability of environment clearance. However, Sarada Mines sources said, they already have obtained the clearance from the Union Ministry of Forest and Environment (MoEF).
JSPL was sourcing iron ore fines from Thakurani for its five million tonne per annum (mtpa) pellet plant at Barbil and lumpy ore for its 3 mtpa steel unit in Raigarh, Chhattisgarh. It had also plans to procure iron ore from this source for its sponge iron unit at Angul, construction of which has already been completed. Though JSPL has the option to buy from other private miners, shutdown of 26 large mines earlier this year by the Supreme Court has squeezed ore supplies in the state.
"There is acute shortage of iron ore in Odisha and the prices are much higher whereas steel prices on the slide because of Chinese supply. The state government must take steps to boost iron ore output in Odisha, which would fetch it additional revenue in terms of mining royalty," said Jindal. According to projection of mines directorate, iron ore output in Odisha could be 28 million tonne by the end of March 2015 due to the shutdown, compared with 62 million tonne excavated last year. Though the state government has taken measures to open eight mines by using special provisions and has allowed transportation of previous year stocks, still the total availability would be around 43 million tonne, less than the 57 million tonne dispatch capping limit fixed by it.
Last month, the state government requested the Centre to allow four mining companies to raise mineral output as per their approved mining plans totaling 16 million tonne additional output per year, since output restrictions on large iron ore miners has resulted in Rs 900 crore deficit in mining revenue collection compared to the target upto October.
