Despite iron ore in hand, JSW plant running at half capacity

Despite buying close to 3.5 million tonnes (mt) of iron ore through e-auction till date, JSW Steel still hasn't managed to ramp up production at its 10-mt plant in Karnataka.

The plant is still running at 50 per cent capacity and ramping up has been delayed due to issues related to getting the ore delivered at its gates. Last month, CEO Vinod Nowal said the company had charted a plan to reach 80 per cent capacity in the first week of November, based on the e-auctions scheduled in the last week of October. The company managed to buy over 40 per cent of the ore in the last two auctions, securing 3.4 mt of ore.

However, the bottleneck is the delivery of ore to the plant, that is forcing the steel major to run at reduced capacity. "The transportation of iron ore is still an issue and we are not able to get it. Several approvals are required and that is an area of concern at present," a company official said.

He added that adequate representation has been made to the Supreme Court and the state government to allow transportation of ore all 24 hours, rather than the 12-hour window period permitted at present.

The company did not comment for the story.

Till October 21, the company had secured 1.9 mt of ore but got delivery of just 18 per cent due to transportation and logistic issues. The problem hasn't improved since. The plant's smaller blast furnaces continue to remain shut and the bigger ones are running on varying capacities based on the deliveries of the ore.

By the end of the second quarter, JSW had already lost nearly half a million tonne of steel production to the ore shortage and was hoping to get back on track in November, based on its aggressive strategy of acquiring ore even if it had to pay more. However, getting back to 80 per cent capacity will take the company some time.

JSW has also reduced its yearly guidance and is now targeting to produce 8.75 mt and sell 9 mt, which includes inventory sales.