The Hindu : Andhra Pradesh / Visakhapatnam News : Centre’s thrust on iron ore exports a cause for concern

Online edition of India's National Newspaper
Friday, Apr 18, 2008
ePaper | Mobile/PDA Version

Andhra Pradesh

Andhra Pradesh - Visakhapatnam

Centre’s thrust on iron ore exports a cause for concern

Santosh Patnaik

Uncertainty over Rashtriya Ispat Nigam Limited’s future plans

Best quality ore will be available for domestic producers only for next 20 years
VSP unions seek grant of captive mines and ban on exports

VISAKHAPATNAM: The boom in infrastructure notwithstanding, the delay in allotment of captive iron ore mines makes the future of Rashtriya Ispat Nigam Limited uncertain.

Though there is no problem with regard to availability of ore at present, with long-term agreement with National Mineral Development Corporation in place, the frequent price rise and the thrust the Centre is giving to exports throw clouds of uncertainty over the future plans of RINL – the corporate entity of Visakhapatnam Steel Plant.

VSP is at present on expansion mode to take the production to 6.3 million tonnes (mt) with an investment of Rs.8,600 crores. Problem will arise when it will implement its stage-II expansion to achieve the designed capacity of 10 mt.

The iron ore price, which was Rs.136 per tonne in 1994, increased to Rs.698 in 2006. The cost of production in India is $9.5 per tonne against $42.55 in the U.S. Iron ore, which used to be exported at around $57 in January 2007, is today commanding a price tag of around $140.

China’s preference

China has huge reserves of iron ore but prefers to import superior grade ore from India. It’s insatiable hunger for Indian ore will certainly create a crisis. VSP is likely to face the music as it is deprived of captive mines unlike Steel Authority of India Limited, TISCO and other steel majors. The proposed merger of Mahanadi Ispat Nigam, which is having captive mines, with the VSP, mooted during the last visit of Prime Minister Manmohan Singh also did not materialise.

Sources said that the exorbitant price increase by steel producers in the country is a fallout of raw material dynamics. More exports are leading to fluctuation in prices in domestic market.

According to a study conducted by Steel Workers’ Federation of India, for the present level production of 50 million tonnes steel in India, the required iron ore is approximately 80 to 85 mt. At the projected production level of 110 mt in 2010-11 by the Ministry of Steel, iron ore requirement will be around 180 mt.

If all the steel plants enhance their level of production to 240 mt, the total requirement of ore will be 400 mt. Hence, the best quality of ore will be available for domestic producers only for next 20 years (the calculations are based mainly on availability of Hematite ore reserves).

“That’s the reason why we are insisting on a ban on ore exports and grant of captive mines,” says N. Dhanaraju, joint secretary of Progressive Front (VSP’s recognised union).

Printer friendly page
Send this article to Friends by E-Mail

Andhra Pradesh