“High iron ore prices and steep transportation cost has forced steel units to operate at depleted capacities”
Steel makers in the state battling steep ore prices and exorbitant transportation cost have sought the intervention of chief minister Naveen Patnaik to overcome their woes.
High iron ore prices coupled with the steep transportation cost has forced steel units to operate at depleted capacities. Most of the steel companies in the state are running their plants at barely a third of their rated capacity.
“Odisha has attracted large scale investment for value addition industries in steel sector. In the present situation of unfavourable raw material supply chain as well as the unilateral imposition of taxes and other corpus contribution vis-a-vis the competition from China, it is becoming nearly impossible to continue to have a sustainable business in the state. We have already solicited the time of the chief minister to apprise him of the impending issues and seek his policy interventions,” said a spokesperson of New Delhi-based Indian Steel Association (ISA).
The ISA had requested the office of the chief minister for an appointment on August 12 but is yet to get any response. The high profile delegation would consist of T V Narendran, managing director of Tata Steel, Neeraj Singhal, managing director at Bhushan Steel, Sanjay Singhal, managing director of Bhushan Steel & Power, Prashant Ruia, managing director of Essar Steel and Naveen Jindal, chairman, Jindal Steel & Power Ltd (JSPL).
ISA had called on the chief secretary G C Pati on June 4 this year, drawing his attention to the plight of the steel industry. The ISA had voiced its concerns on high floor rates for iron ore auctions set by state owned Odisha Mining Corporation (OMC), exorbitant transportation cost of minerals and the proposed upfront water cess of Rs 2.5 crore per cusec allocated to industries. These factors, the ISA pointed out, were eroding the competitive edge of steel makers who are already in the soup, battered by spate of cheaper finished steel imports from China, Japan and Korea.
Since iron ore and chrome ore availability in the state was low, leading to high prices, the ISA called for enhancing production by OMC and merchant miners. On water cess, the ISA stated it needs to be as per actual usage and not according to allocation. The proposed one time infrastructure charge of Rs 2.5 crore per cusec should not be loaded on the Industry, it held. Steel makers have invested over Rs 1.25 lakh crore on their projects in the state.
Despite assurances from the state government, the steel companies were yet to feel the benefits at the ground level.
Prasanta Patnaik