Rising cost of iron ore, freight in Odisha have vexed steel producers: JSPL

The company's chairman, Naveen Jindal, also rues coal shortage for the industry in the state

The rising costs of iron ore and mineral freight in Odisha has added to the woes of steel companies, Naveen Jindal, chairman of Jindal Steel & Power Ltd (JSPL) said.

“While iron ore price in the international market is decreasing, the same in Odisha is increasing. Also, the transporters are increasing the freight rate from time to time. This adds to the challenges faced by the steel industries in the state,” said Jindal after an interaction with A P Padhi, the state chief secretary.

Jindal rued that there is lack of coal for steel industries in the state. Against this backdrop, the premium for coal at e-auctions conducted by Mahanadi Coalfields Ltd (MCL) shoots up by 100 per cent. “In Odisha, we are buying the world’s costliest coal through e-auction,” he added. He urged MCL and Coal India to increase production to enable the steel industry to run efficiently. 

The consistent increase in input prices has pushed up the cost of steel manufacturing. Hike in raw material costs has rattled the steel industries as prices of finished steel products were going downhill. Between April and July 2018, steel prices have sobered to Rs 39,000 from Rs 41,000 per tonne. In the comparable period, prices of iron ore lumps have seen a spike of 10.58 per cent, rising from Rs 4,725 to Rs 5,225 per tonne. Iron ore fines have become dearer too, rising 17 per cent from Rs 2,050 to Rs 2,400 a tonne.

Visibly concerned over the rise in input costs, Jindal prevailed upon the state government to take immediate steps to raise iron ore availability to make it competitive for steel industries. The government notification on revised mineral freight rates also needs to be implemented, he felt.

Citing that most of the steel industries have been admitted to the National Company Law Tribunal (NCLT), the government needs to intervene to rationalise input costs and transportation rates in the interest of the state's overall economy.

JSPL has invested Rs 350 billion in Odisha on a six-million-tonne-per-annum integrated steel project at Angul and the country's largest pelletisation complex of 9 mtpa at Barbil.