Date | May 15, 2017:
Sajjan Jindal-led JSW Steel is keen to have a long-term iron ore linkage arrangement with Odisha government-owned Odisha Mining Corporation (OMC), in order to secure supplies for its planned 10-million-tonne mega steel plant. The company has committed an investment of Rs 50,000 crore on the steel mill and an additional Rs 3,500 crore on associated infrastructure such as coal and iron ore berths and a slurry pipeline.
"JSW Steel wants to secure long-term iron ore supplies for its proposed steel project in Odisha. For feeding the steel plant, it needs 16 million tonnes of iron ore annually. The company has discussed this with the state government, though there is no definitive proposal yet", said a senior government official with the industries department.
OMC currently provides iron ore to several steel units running in Odisha without captive mines. The ore is offered through electronic auctions that are normally conducted every other month. A steel industry or any other end-use plant can source iron ore either through pre-emption or long-term linkage. Under pre-emption, the Odisha government has a policy to reserve at least 50 per cent of the iron ore produced by merchant miners for state-based end-use plants.
In Odisha, Essar Steel, Visa Steel, Jindal Steel & Power Ltd (JSPL), Bhushan Steel Ltd and MMTC-promoted Neelachal Ispat Nigam Ltd (NINL) are among the steel units that buy iron ore from OMC through long-term linkage. For JSW Steel, having a long-term linkage arrangement with OMC makes sense as the state-run miner has been mulling a cut in the floor price of ore offered through this route. Steel and other end-use industries were already pressing for a discount of 20 per cent on the iron ore they buy from OMC via long-term linkage. Even Tata Steel is examining the possibility of clinching a long-term pact with OMC to secure iron ore for its Kalinganagar plant.
R Vineel Krishna, managing director, OMC, could not be immediately contacted for his comments.
For JSW Steel, the other workable route is getting an iron ore block through competitive bidding. JSW Steel has bid for Kalamang iron ore block opened up for auctions in Odisha. The Kalamang block reserved for an integrated steel plant has also got competing offers from Tata Steel Ltd, Tata Sponge Iron Ltd, Bhushan Steel Ltd, Vedanta Ltd, Rashmi Metaliks Ltd, Thakur Prasad Sao and Sons Ltd, JSPL, Shyam Metaliks & Energy Ltd, RINL and Shri Jagannath Steels & Power Ltd.
A source at JSW Steel said, "We keep evaluating different options for iron ore security. Our priority is to win a block through auctions. But, we are also open to buying ore from OMC or merchant miners if our bid is not successful."
Earlier, JSW Steel has unsuccessfully bid for the Ghorburhani-Sagasahi iron ore block in Odisha that went to Essar Steel.
The 10 million tonne steel project by JSW Steel is proposed to come up in two phases- four million tonne in the first phase and later ramped up to the full capacity. The location for the steel unit is yet to be zeroed in though the company has opted for a shore-based location near the Paradeep port.
(Source: http://www.business-standard.com/)