Kalinganagar units may face closure on arbitrary OMC ore prices

All the ten steel units of the Kalinganagar Industrial Complex in Orissa’s Jajpur district are on the verge of closure on account of the alleged arbitrary pricing of iron ore and chrome prices by the state government owned Orissa Mining Corporation (OMC).

It may be noted that all these ten units, reeling under the economic downturn, have recorded cumulative losses of about Rs 500 crore in the past eight months.

Kalinganagar Industries Association (KIA), an organisation representing the interests of these industrial units, has sought the supply of iron ore and chrome ore by OMC at competitive rates (H-1 rates).

In a letter addressed to Raghunath Mohanty on June 4 this year, the state minister for steel and mines, PL Kandoi, president, KIA said, “The system of quarterly tenders for the raw materials of the steel industry is the most appropriate system to ascertain the real market rates. The H-1 rates of such tenders for all items and for all locations were accepted as OMC rates till the onset of recession but this is being ignored at the crucial time when the industries require support for survival.” The letter has pointed out the mismatch of H-1 tender rates and rates fixed by OMC for iron ore at the Daitari iron ore mines in the past eight months. In November-December 2008, the OMC rate was Rs 1,709 per tonne of iron ore as against the H-1 tender rate of Rs 1,179 while during the January-March this year, the OMC rate for iron ore stood at Rs 1,709 even though the H-1 tender rate had fallen to Rs 911 per tonne.

Similarly, during April-June period this year, the OMC rate for iron ore remained unchanged at Rs 1,709 even compared to the H-1 tender rate for the raw material at Rs 1,466 per tonne for the period. KIA has demanded that OMC should honor H-1 tender rates and maintain uniform rates of iron ore and chrome ore at all locations and mines for the same grade of the ore.

Meanwhile, a team of KIA led by its president Kandoi met the Union steel secretary, PK Rastogi, at New Delhi yesterday and sought his intervention for unrestricted supply of raw materials at reasonable rates for survival of the units. These units have so far invested more than Rs 15,000 crore employing about 30,000 persons. Out of the total investment, the bank loans are about Rs 12,000 crore.