Odisha Mining Corp commits iron ore as steel players weigh import option

Steel units are struggling to keep their operations afloat due to raw material scarcity

At a time when the operational steel mills in Odisha are starving of iron ore and a few steel players are mulling to import the ore, state controlled miner Odisha Mining Corporation (OMC) has agreed to supply 2.5 million tonne of iron ore to the units that have signed MoUs (memorandum of understanding) with the state government.

OMC will offer the iron ore as long-term linkage to the MoU signed steel players. A majority of such units have not been allotted captive mines and are operating without ore linkages. The committed quantity would be supplied to 18 steel units before the end of this fiscal. Steel industries that would benefit from the move are Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Jindal Steel & Power Ltd (JSPL), Visa Steel and Nilachal Ispat Nigam Ltd (NINL).

“As per a decision of the state Cabinet, 50 per cent of OMC’s iron ore output would be reserved for state based steel industries while the rest 50 per cent would be put to e-auction. Before the end of this fiscal, OMC is in a position to offer 2.5 million tonne iron ore to state based units. We have a long-term plan to ramp up OMC’s iron ore production to 20 million tonne in the next three years. As OMC’s output goes up, it will be in a position to supply more amount of iron ore,” said Pradipta K Mohapatra, chairman of OMC.

Though 31 out of 48 MoU signed steel units have commenced partial or full scale production, they are struggling to keep their operations afloat due to raw material scarcity. Last week JSPL chairman Naveen Jindal during his visit to Odisha had hinted at the possibility of iron ore imports. Tata Steel was also staring at imports after two of its big mines in Odisha- Joda east and Katamati, that contribute nearly two-thirds of its ore output, went under suspension for expiry of statutory clearances.

Out of the agreed quantum of 2.5 million tonne of iron ore, 60 per cent would be alloted for steel made through the blast furnace route and the rest 40 per cent via DRI (direct reduced iron) route. The agreed quantum is 50 per cent of OMC’s iron ore output expected to be five million tonne this fiscal. Of all the applicants, three companies having iron ore leases have applied for the long-term linkage- Essar Steel, JSPL and Adhunik Metaliks Ltd.

Government data showed Essar Steel is having a lease outside the state whose consent to operate, mining scheme and environmental clearance are not valid.

Though JSPL has a lease called TRB mines, it is not meant for captive use and hence production from this mine has not been deducted from the company’s iron ore requirement.

Adhunik Metaliks has a mining lease with a capacity of 120,000 tonne per annum with valid consent to operate, mining scheme and environmental clearance. This quantity has been deducted while computing the steel company’s iron ore requirement.