JSW Steel might further cut production

Currently, the company is working with just one month?s inventory

JSW Steel Limited is likely to take further cuts in steel production if the iron ore supply situation does not improve in the next one month. The company, which operates an 11-million tonnes per annum steel plant at Vijayanagar in Bellary district of Karnataka, is currently working with an inventory sufficient for just one month, a top company official said.

“We are currently working with iron ore bought in e-auctions, which is sufficient for the month of December. We produced only 69 per cent of the installed capacity in the month of November, compared to 80 per cent in October this year. If the supply situation does not improve, we may have to take further cuts in the coming months,” Seshagiri Rao MVS, joint managing director & group chief financial officer, JSW Steel Limited, told Business Standard.

He said the company produced 762,000 tonnes of steel in the month of October and 600,000 tonnes in November. The cut in production was mainly due to non-availability of iron ore. Due to pricing issue NMDC ore was not sold completely recently, he said.
 

THE MINING SAGA

• Combined capacity of steel production in Karnataka is 20 million tonnes per annum (mtpa), about 24 per cent of the national output
• The industry requires 40 mt of iron ore per annum
• The Supreme Court has allowed 13 mining firms from Category A with a capacity of 5.53 mtpa to resume mining 
• NMDC is producing about 500,000 tonnes per month
• So far, only four mines with 1.4 mtpa have resumed mining
• The Supreme Court is likely to hear the case of Category B mines on January 8, 2013
• The central empowered committee has cleared R&R Plans for 15 mines in Category B

“There is an immediate need for easing of the iron ore situation in Karnataka. We have requested the state and central governments to put on auction low-grade dumps and enable NMDC to increase their production to one million tonnes per month besides opening up of all Category A mines approved by the apex court,” he said.

JSW Steel requires about 1.5 million tonnes per month and the company is currently running at less than one month’s stock, he said.

Currently, NMDC is producing only 450,000 tonnes per month due to constraints as against the permitted capacity of one million tonnes per month. Four out of 13 Category A mines have restarted mining and have produced only 400,000 tonnes, which is available for auction. However, the auction is not taking place due to delay in fixation of prices by those mines, he said.

NMDC is also stocking about 1.1 million tonnes of iron ore and it should take measures to offload its stock immediately, he said.

The dumps in Karnataka contain about 8-10 million tonnes of low-grade iron ore and the state government should take steps to put on auction this ore immediately so that it can give some relief to the steel industry, he added.

The combined installed capacity of steel in Karnataka is 20 million tonnes per annum while the industry requires about 40 million tonnes of iron ore per annum. Currently, only 16-17 million tonnes is available per annum. As a result, the industry is working at less than 50 per cent of its installed capacity, he said.

Steel industry representatives under the banner of Karnataka Iron and Steel Manufacturers Association on Tuesday met the chief secretary of Karnataka and Union steel secretary and submitted a memorandum requesting speedy opening up of mining in Karnataka and auction of low-grade dumps.