Mining curbs helping SCR build new revenue streams

For the Secunderabad-headquartered South Central Railway (SCR), the Supreme Court order restricting coal and iron ore mining has opened new streams for raising freight volumes and revenue maximisation.

The gateway for the flow of this freight opportunity is the ports of Krishnapatnam in Nellore and Kakinada in the East Godavari district, both in Andhra Pradesh.

A few years ago, Krishnapatnam port was in the news for acting as a conduit for the huge flow of iron ore mined illegally in the Obulapuram area, bordering Andhra Pradesh and Karnataka, and for the mines in Goa — all destined for the commodities-hungry Chinese market.

However, the same port is now facilitating the import of the industrially important iron ore for feeding the steel producing units in south and central India including Karnataka, Chhattisgarh, Madhya Pradesh and east Maharashtra.

Figures for the six-month period (Apr-Oct) in the present financial year show the SCR clocked an additional 5.2 million tonnes (mt) of incremental freight (total at 65.4 mt), when compared with 60.2 mt in the corresponding period a year ago. On the back of this, it also successfully surpassed the Railway Board's stipulated target of 64 mt for the period.

The incremental freight was supported by the spurt in demand for coal and iron ore handling at the Krishnapatnam port, which handled an additional 3.9 mt imported coal and iron, lifting SCR’s Apr-Oct period revenues 19 per cent to Rs 4,810 crore, as against Rs 4,044 crore in the year ago period.

The division is also deploying additional wagons for meeting the import spurt. “We are engaging with South and South Western Railways to divert the available wagons for catering to the import surge.

In this month, we will be deploying 1,100-1,200 additional wagons to meet the demand, and expect the demand to multiply in the coming months,” said PK Srivastava, general manager of SCR.        According to him, the inability of Coal India to raise the output, and the new practise of blending domestic coal (80 per cent) with imported coal (constituting 20 per cent) for consumption in the domestic power plants and manufacturing units was helping SCR clock additional freight.

The immediate priority, Srivastava said, was to address all the bottlenecks in last-mile connectivity at the port by coordinating with the shipping ministry. “We have always been of the view there should be an excellent coordination between the Railways and Shipping.”

Srivastava said he was confident the division would register a record freight volume of 118-120 mt for the fiscal 2014-15, -- making it the third largest freight handler in the country next year, up from the fourth position now. In the fiscal 2013-14, as against a targeted 110 mt, it fell short of it at 107.3 mt.

President of Federation of Indian Mineral Industries (FIMI), H Noor Ahmed, a few months back said steel companies were importing iron ore as domestic mining had taken a hit due to policy amendments and the Supreme Court’s ceiling on the quantity of extraction in Goa.

In Karnataka alone, of the 160 mines that exist, only 23 are operational. The state produces around 17 million tonnes a year while the demand is close to double at 30 million tonnes.

In a television interview in September this year, Seshagiri Rao, joint MD and group CFO of JSW Steel, said, the company was increasing iron ore imports more than 50 per cent from the previously planned 6 mt to 10 mt in the present fiscal.

JSW requires around 22 million tonnes of the steel making raw material per annum to make steel but did not import any last year. It imported about 1.7 million tonne in the first half of this fiscal, said Rao.