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Mining lessees in Odisha have urged the state government to lift the mandatory sales order on iron ore fines citing lower utilization and rapidly increasing stock.
Through its resolution dated December 5 last year, the state steel & mines department had made it mandatory for mine lessees without end-use plants, to sell at least 50 per cent of their extracted iron ore to state based consuming industries.
But accumulation of iron ore fines due to tepid demand has prompted the miners to demand lifting of the restriction.
The stock of iron ore fines in the state by the end of August stood at 46.52 million tonne (mnt), with Joda mining circle having the highest inventory at 27.66 mnt followed by Koira with 12.80 mnt. About 7 mnt iron ore lumps has also piled up at different mines of the state, as per data available with the state mines directorate.
Trade sources said the fines stock was around 44 mnt in June, which has gone up by two million tonne in a period of two months, indicating lesser demand for fines inside the state.
"Odisha produces about 60 mnt iron ore annually. As per the 50 per cent domestic sales order, miners have to sell 30 mnt to local units whereas the total need of Odisha-based standalone steel plants is less than 15 mnt. This is the reason for the increasing stock”, said a senior official of a large standalone mining company.
During 2012-13, the state produced 62 mnt iron ore, despite a combined cap of 52 mnt imposed for Joda and Koira, the two most prolific circles contributing to over 80 per cent of total ore output.
Considering trade estimate of 60 per cent fines generation during mining, the fines production was around 37 mnt in the year ending March 2013.
With higher fines output and limited demand for the commodity, fines stock has been piling up at the mines pit heads.
Though the amount of conversion of fines into pellets lower in Odisha compared to its production, it has picked up recently as many firms have shown interest to produce pellets. Currently, Jindal Steel and Power Ltd (JSPL), Brahmani River Pellets Ltd (BRPL), Essar Steel and Bhushan Steel and Power Ltd are engaged in production of pellets with a combined annual capacity of 18 mnt.
Public sector steel units like Steel Authority of India Ltd (SAIL) and Neelachal Ispat Nigam Ltd (NINL) also produce sinters for their own use.
“Many pellet and sinter producers source iron ore fines from their captive mines, leaving very limited users for procurement of fines. The state government is aware of the issue of the miners and we hope it would take a decision soon in this regard,” said Prabodh Mohanty, spokesperson for East Zone Miners' Association (EZMA).
