Steel industries hit as OMC iron ore output nosedives

While the State Government is worried over its raw material support for the State’s steelmakers, the falling iron ore production level of the State-owned Odisha Mining Corporation (OMC) has multiplied the woes of the secondary steel sector.

The units that can be categorised under the secondary steel segment include sponge iron, mini blast furnace, induction furnace and electric arc furnace, hot rolled units, cold rolled units and colour coated units. To ease the raw material supply hurdle, Chief Minister Naveen Patnaik has recently formed an Inter Ministerial Group (IMG) headed by Finance Minister Prasanna Acharya.

The IMG, which includes Industries Minister Niranjan Pujari and Minister Industries and Steel and Mines Minister Rajani Kanta Singh, will meet on November 26. “But when the OMC’s production level is falling continuously, how will the IMG be able to save the situation,” wondered a former Director of Mines. “It is high time the State Government took determined steps to boost the production of the OMC to save the State’s steelmakers,” he said.
If one looks at the production statistics of the OMC, which was producing 7.84 million tonnes per annum (MTPA) of iron ore in 2008-09, the production came down to 7.43 MTPA in 2009-10. The slide-down continued in 2010-11 when the OMC registered a production figure of 5.34 MTPA, and it further went down to 4.27 MTPA in 2011-12. And it has hit the lowest of 3 MTPA in 2012-13.

The dwindling OMC production has directly hit steel industries of both Odisha and neighbouring States, which are heavily dependent on Odisha ore. The annual requirement of iron ore for these industries is around 20 MTPA while the OMC can, in fact, produce 25 MTPA, feel experts. According to its latest plan, the OMC has targeted to produce 25 MTPA iron ore in 2018-19.

Recently, the steelmakers in Odisha submitted a proposal to the Government that 70 per cent of iron ore production of the State be set aside for them. While the production of iron ore has dwindled, the chrome ore production has also received a setback. During 2008-09, the chrome ore production was 9.86 lakh tonnes per annum (LTPA), which came down to 5.42 LTPA in 2009-10. And in 2012-13, it has hit the lowest of 3 LTPA.

Interestingly, the OMDC, a Central PSU of the Ministry of Steel, which has recently been fined Rs 11,000 crore for excess production, could produce much more than the stipulated amount, said an analyst. Then, how come the OMC production is falling, he wondered. Now, all the OMDC mines have been closed, and there is ‘zero’ production, revealed he.

The OMDC has agreed to allocate 70 per cent of its production for the industries in the State, but it is not receiving requisite support from Government officials, rued a senior official in the Central PSU. “If the OMDC is allowed to operate its mines in Odisha, the raw material requirements of the steel industries can be fulfilled,” said he.

While the OMDC is eager to produce more, the NMDC, another Central PSU, is producing 25-30 MTPA of iron ore and earning huge profit, revealed a senior officer in the Union Ministry. Due to its falling production, the OMC earned a profit of Rs 1,269 crore in 2011-12 while the NMDC earned a profit of Rs 7,265 crore during the same fiscal, giving much more dividend to the Union Government, said sources.
Keeping this in view, the State Government needs to help out the OMC boost its production by clearing the bottlenecks of forest, pollution and other clearances, for which many OMC mines have failed to operate.

Joint efforts by the Departments of Steel & Mines and Forest & Environment and the State Pollution Control Board and a determined move by the top management of the OMC could save the situation, said a former Minister Steel & Mines.