JSW Steel again wrestles with ore supply cramps

The availability of ore in Karnataka is about two mt for April, when the entire industry, including JSW, requires about three mt each month to operate at optimum capacity

The big shortage of iron ore in Karnataka has JSW Steel again looking for alternatives. With the slow progress in resumption of operations from the Category-A mines in the state, it is looking at shipment from within the country and abroad.

The availability of ore in Karnataka is about two million tonnes (mt) for April, when the entire industry, including JSW, requires about three mt each month to operate at optimum capacity. Only seven companies in Category-A have resumed mining, with a combined annual output of 3.3 mt.

“The entire steel industry is depending on just 2-2.5 mt in April from all sources, like the seven working mines in Category-A and run of the mine (ROM) material, apart from the regular production from (government-owned) NMDC. We are now left with just about one month’s stock of ore. We are now awaiting the Supreme Court nod for Category-B mines, so that we will get sufficient stocks from May onwards,” Vinod Nowal, director and chief executive, JSW Steel, told Business Standard. With the current stock at the Toranagal plant in Bellary, the company can operate at about 70 per cent of capacity.

JSW has plans to import five mt of ore from Australia and South America for its coast-based plants at Dolvi in Maharashtra and Salem in Tamil Nadu during 2013-14. For the Bellary unit, it will continue to source the raw material from Chhattisgarh and Odisha, in addition to the stock available through e-auctions in Karnataka.

“We are procuring about 200,000 tonnes of ore with 63-64 per cent ferrous grade every month from these two states together. As there is a shortage of railway rakes, we are unable to bring more material. With the low-grade material available in Karnataka, we blend the high-grade ore from other states and use it in our plant to achieve 70-80 per cent capacity utilisation,” said P K Murugan, vice president (commercial). He said the landed cost of the material from these two states worked out to Rs 5,000 a tonne as against Rs 3,600 a tonne for the material bought at e-auctions in Karnataka.