JSW Steel Ltd, which has cut steel production to 30 per cent of the installed capacity due to the shortage of iron ore, is optimistic of restoring production by the end of Octo-ber. The company, which has grabbed a lion’s share at the ongoing e-auction of iron ore in Karnataka, hopes to stock close to a month’s inventory at its plant in Toranagallu in Bellary district.
At the third iron ore auctions held on Tuesday, JSW picked up 1.35 million tonnes, about 65 per cent of the iron ore on auction. It picked up 61.5 Fe grade iron ore at a price of Rs 2,447 per tonne. With this, the company has now purchased a total of 1.85 million tonnes, about 55 per cent of the 3.34 million tonnes sold at the auctions since September 14.
The company requires close to 1.5 million tonnes of iron ore (63 Fe grade and above) to run its plant for one month. It needs 1.8 million tonnes per month, if the Fe level goes down to 58 grade.
“We have a storage capacity for stocking up to 4 million tonnes at our Toranagallu plant. With the regular auctions we wish to purchase up to this level in October and by the end of the month we can bring back production to normal levels,” Vinod Nowal, director and CEO, JSW Steel told Business Standard.
Presently, JSW has reduced capacity utilisation of its 10 MTPA Vijaynagar Steel Plant to a mere 30 per cent of capacity, the minimal level for the plant to keep running.
A JSW Steel spokesperson, however, said due to some administrative procedures the iron ore dispatches were not happening timely. With about 20,000 tonnes ore coming in from Jharkhand, Orissa and Chhattisgarh along with the ore bought at the auctions, the company would achieve near 100 per cent capacity utilisation by October 28, he said.
The Supreme Court appointed Monitoring Committee had put on auction about 2.1 million tonnes yesterday spread over 90 lots. Of this, 1.5 million tonnes were iron ore fines and the balance was lumps and low-grade ore. The base price was fixed at Rs 2,750 for 65 Fe grade ore with Rs 100 less for a drop of every grade. The next auctions are scheduled for October 12.
Nowal pointed out that of the 25 million tonnes being put on auction (by next few quarters), only about 18 million tonnes were of high grade and the balance ore, which is below 52 Fe grade, cannot be used by steel mills as there is no technology to use such low-grade ore in the country. “The high grade ore available in the stockpile can be used for about 10 months and we hope the regular mining to resume in the due course of time,” Nowal said.
Meanwhile, the company has decided not to increase the prices of its steel products despite the rise in the cost of inputs.
“The iron ore prices have gone up by Rs 1,000 per tonne to Rs 3,500 per tonne compared to two months ago, which is a rise of about 40 per cent. The overall cost of production has gone up by Rs 2,000 per tonne. At this rate, it is not competitive for any non-captive user to run their plant. But, we want to wait and watch the situation as it’s not feasible to increase prices above the international levels,” Nowal added.
