KNIA asks OMC to reduce chrome, iron ore prices

The Kalinganagar Industries Association (KNIA), the industry body representing 10 industrial units in the Kalinganagar area in Jajpur district, has sought the immediate reduction of iron ore and chrome ore prices by the Orissa Mining Corporation (OMC) to save these units from being closed down.

"The Kalinganagr units solely depend on the raw materials supplied by the state owned OMC will be forced to retrench workers and close down their units if OMC further delays the decision to reduce the ore prices", P L Kandoi, president , KNIA told the media. He said, about 300 units in the state including 150 sponge iron units are dependent on OMC for raw materials. These units provide employment to about 1, 20, 000 persons directly and indirectly. Besides, the state government would lose about Rs 3000 crore on value added tax (VAT) and excise duties if these units will be closed.

Kandoi said, the global financial meltdown has affected the commodity prices and has resulted in substantial drop in price of pig iron, sponge iron and steel. While the price of domestic pig iron dropped from Rs 32,000 per tonne to Rs 24,000 per tonne, the sponge iron prices has also declined from Rs 24,000 to Rs 13,000 per tonne.

The prices of products has declined by about Rs 10,000 per tonne while the prices of iron ore has declined by Rs 540 per tonne making the units unviable. In this context KNIA had made a representation to the government to reduce the ore prices. Though OMC completed the re-tendering process by 11 November, it is yet to implement the revised price.

He said, the highest price was reported to be Rs1000 to Rs1100 per tonne of iron ore. However, there is no lifting of iron ore by the user industries for last two months as OMC yet to implement the revised price. The association, he said, had also requested OMC to cut down the price of chrome ore from 1 November but it is yet to revise theprice of chrome ore.

Vinod Kumar, secretary, KNIA said, the prevailing situation has made the units located at Kalinganagar unviable. While KJS Ispat has been closed for last 15 days, Visa Steel has not been able to start its 1000 tonne new unit. Mesco steel has already closed its first blast furnace and the second blast furnace is on the verge of being closed. Similarly, Dinabandhu Steel has cut its production by 50 percent.

Besides, Jindal Stainless has cut its ferro-chrome production by 75 percent, Rohit Ferro-tech by 80 percent and Visa Steel has stopped its ferro-chrome production totally. Since the restarting of the blast furnaces take about one week and costs about Rs four crore, the units are in a tight spot, he pointed out.

Though there has been no retrenchment of employees so far, it cannot go on indefinitely. Keeping that in view the association has sought immediate government assistance. Meanwhile, a delegation of the KNIA met the steel and mines secretary Ashok Dalwai and discussed about the problem. He has assured to take a decision in next 2 to 3 days.