Odisha-based steel firms, which do not have captive mines, have asked the government to make it mandatory for all iron ore miners in the state to sell at least half of their produce to Odisha-based sponge iron and steel units unless they consume 50 per cent for their own captive use, reports Financial Express. Only the balance quantities of ore could be exported to other parts of the country or abroad, they have demanded.
A report filed by the Financial Express says while this may amount to deviation from the auction rules, in the absence of such stipulation, the local industry will suffer a lot and production will take a huge hit. Tata Steel, which owns captive mines in the state, however, says it does not have any problem of iron ore shortage.
Odisha produces nearly 25 per cent of the country’s total steel. The state produces an average of 110 million tonnes of iron ore a year. However, during last fiscal, it produced 145 million tonnes. Decreased iron ore production, lucrative exports to other states of India and to other countries are the two primary reasons for the shortage. Higher steel price has further made the raw material dearer as well.
Leases for 19 merchant mines, which contributed around half of Odisha’s 115 MT iron ore production in 2018-19, expired in March and 18 of them were successfully auctioned, Financial Express reports.
The government had extended the validity of all statutory approval of these mines by two years, to ensure the successful bidder can resume production immediately. As on August 1, only three mines — two merchant and one captive — of these 18 could start limited production.
NMDC, which takes multiple factors into account to arrive at the sale price of iron ore including domestic demand-supply scenario, price of steel, stock in hand, previous month sale, international iron ore price, price of competitors, etc, had reduced the price by Rs 900 per tonne in April and May; but increased the price by Rs 700 in July and August.