Iron ore exports and high prices hit Odisha-based steel units
Rourkela: Iron ore-using industries in Odisha are finding it increasingly difficult to source raw materials, although Odisha is one of its largest producers in the country.
They attribute the current crisis to interstate exports of iron ore and a sharp rise in prices in recent times. Industry organizations have called for immediate state government intervention and the restoration of pre-emptive rights in the state.
Industrial bodies such as the Confederation of Indian Industries (CII), the Odisha State Council; The Pellet Manufactures ‘Association (PMA) and the Odisha Sponge Iron Manufacturers’ Association (OSIMA) in separate letters to the Chief Secretary of Steel and Mines, Surendra Kumar, called for the necessary measures to lift them out of the crisis .
“Large industries and MSMEs have set up factories with a firm commitment from the Odisha government for a sustainable supply of iron ore to state factories, under memoranda of understanding signed with the government of the state. However, in recent times the state-based steel industry has faced a huge challenge due to endemic interstate shipments, low iron ore production in the state and therefore an exponential increase. iron ore prices, â€CII Odisha State Council Chairman Manish Kharbandha said in his letter to Kumar.
In addition to adding value to the ore, these units contribute to the revenue of the Public Treasury and provide livelihoods at around 10 lakhs. “It is paradoxical that although Odisha is the largest producer of iron ore and steel with 25% shares in steel (33 MTPA), 35% in sponge iron (14 MTPA) and 33% of iron ore pellets (30 MTPA), state units are struggling to obtain their main raw material, â€Kharbanda noted.
Market prices for iron ore chunks and iron ore fines in Odisha have seen unprecedented price increases, reaching Rs 12,500 and Rs 9,500 per tonne respectively; about a year ago it was Rs 6000 and Rs 2000 respectively. “Today, Odisha iron ore is the most expensive in India, preventing state industries from remaining commercially viable and to compete with units outside Odisha, “OSIMA President Yogesh Dalmia said in his letter to Kumar. .
Industry lobbies have identified the interstate export of iron ore as the main reason for the shortage of raw materials in Odisha. Against a combined requirement of all end user iron ore units of approximately 81.4 million tonnes, Odisha has a combined production capacity of approximately 105 million tonnes.
According to some sources, around 56 million tonnes of iron ore were shipped to outside states from Odisha last year, which is more than half of the state’s total iron ore production.
“There is an urgent need to restore pre-emptive rights over iron ore for state-owned factories and to reduce the endemic diversion and export of valuable iron ore to outside Odisha, ensuring a sustainable supply of ore usable for state-based end-use factories, protecting the livelihoods of hundreds of thousands of people, â€said Dalmia.
In Karnataka, rich in iron ore, pre-emption rights are in vogue, thus preserving the interests of the steel industry. “There is a total ban on the export of iron ore from Karnataka to outside the state, paving the way for large-scale use of the capacities of factories located inside the state. This has resulted in higher incomes, more jobs and greater added value for Karnataka, with a positive integrated impact on industries upstream and downstream of the MSME sector, â€Kharbandha said.
“Odisha also had a right of first refusal policy in 2013-14 with a similar motive. It must be restored in the best interests of the state, â€Dalmia added.