JOIN USSteelmakers urge Karnataka government to ensure adequate supply of iron ore
The manufacturers of steel and allied products like sponge iron and pig iron have sought firm assurance from the Karnataka government on the availability of raw material to cater to their current needs and upcoming expansion plans.
In a letter written to the Minister of mines Murugesh Nirani, the Karnataka Iron and Steel Manufacturers Association (KISMA) has stated it would be difficult for the industry to expand in the state if the government does not ensure an adequate supply of iron ore.
Currently, the steel industry produces 19 million tonnes of steel and allied products and the capacity is expected to go up to 34 million tonnes by 2025. The availability of iron ore currently stands at 32 million tonnes, while the requirement is 35 million tonnes. The requirement is expected to increase to 47 million tonnes by 2023 and 61 million tonnes by 2025.
The steel industry has made significant investments in the Ballari district as it is closer to the key raw material.
JSW Steel, which operates a 12 MTPA steel plant at Toranagallu in Ballari district, is in the process of expanding its capacity to 18 MTPA at an investment of Rs 15,000 crore by end of 2022. Further, it wants to expand the capacity to 24 MTPA by 2025 at an additional investment of Rs 20,000 crore. The company alone requires 44 million tonnes of iron ore by 2025. If other steelmakers increase their production even by 10%, the industry requires around 61 million tonnes of iron ore by 2025, KISMA said in its memorandum.
Keeping in mind the growth of the steel mills, KISMA has urged the state government to auction virgin mines and amalgamated mining leases in order to meet the demand in the next five years.
The state government is expected to generate around Rs 10,000 crore revenue by auctioning fresh blocks and amalgamated leases, according to industry sources.
JSW Steel had been sourcing ore from its captive mines in Odisha to tide over the shortage. The company currently requires about 24 million tonnes per annum and 44 million tonnes by 2025 when the expansion is completed.
“With the resumption of mining at Donimalai by NMDC, we expect the production to normalise in Karnataka from next fiscal. We have already suspended importing iron ore from our mines in Odisha,” said PK Murugan, President, JSW Steel.
Other steel mills like Kalyani Steel are also looking to expand their capacity in the Ballari plant to 1.5 million tonnes. “We are facing multiple issues like deterioration in the quality of iron ore and a rise in the prices of raw material. Unless the government brings new mines into production, adequate supply of iron ore cannot be achieved,” R K Goyal, Managing Director, Kalyani Steel Ltd and VP, KISMA told DH.
He said landed prices of iron ore have doubled in Karnataka over the last six months to Rs 7,000 per tonne and coke prices increased 60-70% making it extremely difficult for small steel producers to operate. “The government should reserve one or two mines only for small steelmakers,” he added.