Odisha clampdown to wipe out 27 mt iron ore output

The recent order of the Joda mining circle office to 10 miners, who are waiting for renewal of their mining leases, to restrict iron ore output only to the extent of their captive plant need until the completion of the lease renewal process, is likely to result in 27 million tonne (mt) production loss per year, trade estimates said.

The order follows a recent state government resolution that mines having value addition industry attached to it will be given priority at the time of renewal of mining leases.

At present, 28 iron ore and manganese mines are waiting for their second or subsequent renewal. The dispatch of production restriction notices to 10 mines in Joda is expected to be followed with similar missives to 18 mines in Koida, Baripada and Koenjhar mining circle soon.

 

Meanwhile, the clamp down by the state steel and mines directorate has emerged as a major cause of worry for the mine owners and user steel industries in the state.

“The notices served to 10 miners in Joda will affect more than 60 per cent of total 55 mt iron ore output in Odisha as most of them are large mines. Around 100 steel units would be affected because of the loss of supply,” said Prabodh Mohanty, spokesperson for East Zone Mining Association (EZMA).

The major loss would come from three miners, who do not have any value addition industry attached to their mines and hence, will have to stop production as per the new resolution brought in by the state government earlier this month.

The three mines are Essel Mining, Kalinga Mining Corporation (KMC), Bhanja Minerals. They contribute around 15 million tonne output, with Aditya Birla group owned Essel leading the pack with a capacity to produce 12 mt annually.

Besides, the companies who have to slash production as per their captive need are Tata Steel, MISL (Mesco Steel), KJS Ahluwalia, Steel Authority of India (SAIL),KayPee Enterprises, RP Sao and K N Ram. These seven mines produce around another 18 mt iron ore.

However, as SAIL and Tata Steel do not trade the raw material in the outside market beyond their captive use, the rest five have to trim output as per the captive need, which will wipe out another 12 million tonne iron ore production yearly, said Mohanty.

There are about 146 sponge iron plants, 29 partially commissioned integrated steel plants in the state and all of them depend upon the iron ore supplies from Joda and Koida circles, which account for a fourth of India’s total annual production.

Besides, many steel makers from Chhatishgarh and West Bengal depend on iron ore of Odisha and a significant portion of the output also goes for exports.

“The new resolution of the state government is likely to create short supply of the mineral in short term and could impact half the industry as the notices were sent to big mines. Another blow will come shortly when Koida mining circle sends notices,” said P L Kandoi, president of All Odisha Steel Federation.