For representational purposes. (File | Reuters)
JAJPUR: Iron ore production in Odisha, a leading supplier of ore to the country, has significantly declined from 142 million metric tonne (MMT) in 2019-20 to 111 MMT in 2020-21, raising concerns over the survival of domestic steel companies. Further, reckless export of iron ore has created a huge shortage resulting in unprecedented increase in prices.
Of the 111 MMT of iron ore produced in Odisha, around 65 MMT is produced from captive mines of Tata Steel, SAIL, JSW Steel and Arcelor Mittal. Most of the auctioned merchant iron ore mines such as Serajuddin, Fomento, Tarana and Vishal LPG have not started production or achieved minimum production threshold. This resulted in the merchant supply of ore to shrink to only 44 MMT with OMC producing around 13 MMT, Rungta Mines 10 MMT, Essel Mining 6 MMT and D R Patnaik 4 MMT.
Due to decreased merchant iron ore supply, iron and steel plants from West Bengal and Chhattisgarh actively participated at the recent OMC auction held on June 2 wherein 6,19,000 MMT of iron ore was offered for auction. The average price of iron ore was kept at Rs 11,612 per MMT, an increase of around Rs 4,000 per MMT as compared to the last tender.
Industry experts said the price increase was deliberate to reap profits from their own mines as the price determined through the auction becomes applicable to end-user industries without captive iron ore mines in Odisha who are long term lease buyers of OMC. However, due to this unprecedented price rise, many units have become unviable and shut down. Even earlier, several industries like NINL, MESCO, Adhunik, Concast, MSP, etc had closed.
Many other end-user industries have been badly hit, leading to huge retrenchment of manpower during the tough times as well as losses in the revenues of the State government. Industry bodies like Orissa Sponge Iron Manufacturers’ Association (OSIMA) and Kalinganagar Industries Association (KIA) have sought the intervention of Chief Minister Naveen Patnaik, Chief Secretary and Secretary, Steel and Mines in the matter to keep iron ore prices at a reasonable level.
“There should be a hike in production of iron ore. Secondly, captive miners should not take part in iron ore auction process and a special provision should be made to dictate fair price of iron ore for the LTL buyers so that iron and steel industries in the State can survive and make some profit,” said P L Kandoi, president of KIA. Voicing similar concerns, OSIMA president Yogesh Dalmia opposed the current auction process and said the auction of iron ore by OMC should be made on a monthly and not bi-monthly basis.
“Despite the auction, 80 per cent of the iron ore should be reserved for Odisha-based industries. OMC should focus on increasing its iron ore production first and stop exporting the mineral to cater to the state-run iron and steel industries at a fair price.” added Dalmia.
