Steel units jittery as Odisha goes slow on ore supply mechanism

HC deadline to fix prices for ore supply to expire in July first week

Steelmakers in Odisha are on tenterhooks with the state government dragging its feet over devising a mechanism for proper implementation of its resolution to reserve at least 50 per cent of the iron ore produced by the standalone miners for the local industries.

The state government through a policy resolution dated December 5, 2012 had reserved 50 per cent of the iron ore mined by merchant miners for meeting the raw material need of local industries operating in the state without ore linkages.

The Odisha High Court, on April 2, while upholding the policy resolution of the state government, had called for a mechanism for its implementation within three months. Else, the notification would stand null and void, the court pronounced. The court spelt its order after various parties including top mining body Federation of Indian Mineral Industries (FIMI) contested the notification of the state government, demanding its withdrawal.

Now, with barely 10 days left for the deadline to lapse, the anxiety among local steel makers has only deepened.

"The units operating at Kalinganagar steel complex are in a hopeless situation. Raw material unavailability has pushed them towards the verge of closure. If the government fails to come out with the much needed mechanism, it will only spell the doom for such units," said P L Kandoi, president, Kalinganagar Industries Association (KNIA).

"If the government fails to meet the deadline of July 2 and does not pre-empt iron ore for the sake of industries, most of the iron and steel making units will face closure due to unavailability of iron ore. Taking advantage of the short supply of iron ore, the few private mines which are operating have stopped sales so as to escalate prices. It is up to the government now to take matters into their hands. Else, the industries will be constrained to lay off workers and executives giving rise to unemployment and law & order situation," said an official of a steel company sourcing ore from Odisha.

The state government officials, however, claimed that they are on the job to come out with the mechanism to ensure iron ore supply for local industries.

"The steel & mines department has informed the Odisha High Court that it will indeed come out with the mechanism for implementing its policy resolution within the prescribed deadline," said a source at the department. The raw material scarcity afflicting the steel players in the state had recently turned the heat on the state government in the assembly.

The Opposition squarely blamed the government for the escalating crisis, alleging that lack of a definitive and consistent mineral policy had created the mess. The Opposition MLAs also flayed the government for keeping the report of an inter-ministerial committee under wraps.

The state government had formed an inter-departmental panel chaired by former finance minister Prasanna Acharya to recommend measures for ensuring long-term raw material supplies to the industries. The committee had prepared its report after prolonged discussions with all stakeholders.