VISAKHAPATNAM: For Visakhapatnam Steel Plant, a Navaratna company, the absence of captive iron ore mines has remained a bone of contention even after three decades since it began production. Even Union Minister of Steel Darmendra Pradhan has admitted that the non-allotment of captive mines was one of the reasons for the losses suffered by Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of the VSP.
RINL was initially with the Steel Authority of India (SAIL) and when it was separated from SAIL in 1982, no mines were allotted. Though it was contemplated to give mines in Chhattisgarh, it did not materialise for some reason or the other.However, as per the agreement, the National Mineral Development Corporation (NMDC) has to supply ore from iron deposit blocks of 5 and 4 at Bailadila in Chhattisgarh, but it has been supplying ore from 11 and 11 C blocks.
The RINL began facing problems after the NMDC went for public equity as the latter started charging market rate. According to sources, around the same time, the iron ore prices went up following increased exports to China from Obulapuram and other mines. The demand for captive mines further hit a roadblock with the introduction of the 2015 mining policy, under which the state governments are empowered to allot mines on the suggestions of the NMDC.
In 2011, the VSP acquired 51 per cent shares in the Odisha Mining Corporation (OMC). Both OMC and Eastern Investment Limited (EIL) became subsidiaries of RINL. The OMC has six manganese and iron ore mines in Keonjhar and Sundargarh. RINL paid Rs 341 crore as paid up share capital. However, the acquisition ran into legal hurdles and endowments issues. The issue remained unresolved for several years. Even after eight years, it did not get even a single tonne of iron ore from OMC. As the lease agreement expired, RINL paid penalties in the Supreme Court and the mines may be operated very soon. The steel plant would get only a share in profits and would have to pay market rate for iron ore, if it procured.
Had mines in Obulapuram in AP or any mine in mineral-rich Odisha been allotted to RINL, the captive mines issue would have been resolved, sources said. At least now, SAIL, which is exporting ore, should supply ore to RINL to overcome the problem, they demanded.
Joint secretary of Steel Executives Federation of India SS Chandra Rao told TNIE that non-allotment of captive iron ore mines for long was one of the causes for the present financial crisis of RINL. He said RINL was using around 6.5 MT of iron ore per year and it will increase to 10 MT as expansion units are already commissioned.
He said RINL was losing almost Rs 800-1,000 crore per annum at present on procurement of iron ore only compared to other steel plants and this will go up further when it reaches 10MT capacity. Right now, VSP is procuring iron ore from the NMDC at market price. He said when he was general secretary of the SEFI, he urged SAIL in 2018 to supply ore to RINL. But no action was taken in this regard.In the absence of captive mines, RINL has started participating in e-auctions, tender route and procurement of slimes to supplement iron ore mines in sinter plant.
