JSW steel to restore full production in 4 weeks
Aggressive stockpiling to counter Karnataka ore shortage; rules out steel price rise for some time
JSW Steel, which had cut production to 30 per cent of installed capacity at its 10-million tonnes-per-annum (mtpa) Karnataka unit after the ban on mining and sale of iron ore, is optimistic of restoring normal output by the end of this month.
The company grabbed the bulk of what was offered at yesterday’s Supreme Court-authorised e-auction of ore, the third in the series. It hopes to stock close to one month’s inventory at its Vijayanagar plant, situated at Toranagallu in Bellary district.
At yesterday’s auction, JSW picked up 1.35 million tonnes, about 65 per cent of what was put up. With this, it has purchased a total of 1.85 mt, about 55 per cent of the total of 3.3 mt sold at the auctions since September 14. It requires close to 1.5 mt (of 63 per cent iron-content grade and above) to run the plant for a month. It needs 1.8 mt if the iron level goes down to 58 per cent grade.
“We have a storage capacity up to 4 mt at Toranagallu. With the regular auctions, we wish to purchase up to this level in October and by the end of the month, we can bring back the production to normal levels,” Vinod Nowal, director and CEO, JSW Steel, told Business Standard.
A 30 per cent capacity utilisation is the minimum needed to keep the 10 mtpa Vijayanagar plant running.
A company spokesperson said a hitch in administrative procedures had afected timely despatch of iron ore. With about 20,000 tonnes ore coming from Jharkhand, Orissa and Chhattisgarh, along with the ore bought at auctions, the company would ach ieve near-100 per cent capacity utilisation by October 28, he said.
The Supreme Court-appointed monitoring committee had put on auction about 2.1 mt yesterday, spread over 90 lots. The next auctions are scheduled on October 12.
Nowal said of the 25 mt scheduled to be put on auction, only about 18 mt was of high-grade ore. The rest was ore below the 52 per cent iron grade. These cannot be used by steel mills, as there is no technology to use such ore in the country. “The high-grade ore available at the stockpile can be used for about 10 months and we hope regular mining would resume in due course,” he said.
NO STEEL PRICE RISE
Meanwhile, the company has decided not to increase the prices of its steel products, despite rise in the cost of inputs. “Iron ore prices have gone up by Rs 1,000 a tonne to Rs 3,500 a tonne compared to two months ago. The overall cost of production has gone up by Rs 2,000 a tonne. At this rate, it is not competitive for any non-captive user to run their plant. We want to wait and watch, as it’s not feasible to increase prices above the international levels,” Nowal added.