The state government has constituted a committee which will decide the quantum of iron ore and chrome ore to be allotted to local steel producers as per a cabinet approval last week.
State industry secretary, Vishal Dev and G Mathivathanan, chairman and managing director (CMD) of Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) have been included in the committee. S N Girish, managing director of state-run Odisha Mining Corporation (OMC), will act as the coordinator of the committee, a government official said.
The state cabinet last week had approved a proposal of OMC for long term ore supply arrangement with metal processing industries. The proposal was based on a ministerial committee report last year to provide raw material linkage to local industries. As per the proposal, OMC will provide 50 per cent of iron ore and 70 per cent of chrome ore produced by it at market rates to companies which have signed MoUs with the state government and are currently in operation.
The conditions to get raw material linkage from OMC will benefit Bhushan Steel and Power Ltd and Bhushan Steel Ltd, Visa Steel which will be getting iron ore since their plants are already in operation. Similarly, chrome ore supply linkage will benefit stainless steel maker Jindal Stainless Ltd (JSL) and other ferrochrome producers such as Nav Bharat Ventures.
The state-run miner produces nearly two million tonne iron ore and close to 800,000 tonne chrome ore every year.
The committee set up by the government will decide the allotment quantity for each of the eligible company according to their production capacity. Based on the recommendation of the committee, the companies will have to procure raw material from mining sites of the OMC at a price that will be pegged to rates derived from online auction.
"The price for long term supply will be decided by taking average price obtained from online auction for iron ore and chrome ore," said a government official involved in the process.
A formal notification from the government with regards to pricing details and allotment of ore to steel makers has not been published yet. As per the proposal approved by the cabinet, OMC will continue the supply pact for a period of five years. Out of 49 companies which have signed MoUs with the state government for establishment of steel industries, only 31 have started production on a partial scale. A large chunk of investments have flown from small and medium scale firms with steel-making capacity of below one mtpa. In total, these companies have achieved a combined steel output of 12.66 mtpa.
