More feed for ore-hungry steel makers

Last Updated: Tue, Sep 11, 2012 04:06 hrs

Iron ore-starved steel manufacturers such as JSW, BMM Ispat and Kalyani Steel, among others, are likely to get a little more of the raw material than had been expected before regular mining resumes in Karnataka.

The monitoring committee appointed by the Supreme Court to conduct electronic auctions is likely to make available an additional 2.5 million tonnes from the stockpile in the next few days. The committee, till now, had sold 24 mt of a stockpile of 25 mt. According to fresh estimates, there is an additional 2.5 mt at various mines available for auction, state government sources said.

It is estimated the steel industry might have to rely on stockpiles for another two months before the fresh ore comes to the market. About 700,000 tonnes comes each month from state-owned NMDC, the one company allowed during the SC-ordered ban to continue operations in the state. Regular mining is likely to be delayed for a couple of months more in the state, with a majority of the 18 in Category-A yet to secure several of the statutory clearances ordered by the apex court.

JSW Steel, BMM, Kalyani, Kirloskar Ferrous Industries and MSPL require a total of about 17 mtpa for their plants in Karnataka. While JSW has a fair quantity of raw material stock, the others have a hand-to-mouth situation. JSW is operating its 11 mt per annum (mtpa) plant at Toranagallu (Bellary) at 80 per cent of capacity, while BMM and Kalyani are doing so at a little over 50 per cent.

“We have started re-estimation of iron ore stocks at various mines in the state. As per our initial estimates, another 2.5 mt is likely to be available for auctions. We will know the exact data after completing the fresh assessment of the leftover stocks at the mine heads,” Karnataka government sources told Business Standard.

According to monitoring committee officials, another 5.4 mt of ore is left in the state for auction. A majority of this ore is, however, low-grade. The panel is is auctioning about 1 mt tomorrow. It is expected the remaining stock would be sufficient for another two months or so; by then, the fresh ore would hit the market.

The SC, after imposing a temporary ban on mining in the state in July 2011, had (the following month) ordered e-auction of about 25 mt from the stockpiles to help steel, sponge and pellet makers to tide over the supply block. The industry has been depending on that ore.

Recently, the SC allowed resumption of regular mining by 18 Category-A mines (those with no or negligible illegalities). However, only one, Mineral Enterprises Ltd, has all statutory approvals in place and had commenced regular mining from last Thursday. It is likely to produce around 200,000 mt in the next one month, of the 380,000 mt ceiling fixed by the court’s Central Empowered Committee.

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