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Updated: August 8, 2011 15:45 IST

Iron ore shortage: JSW Steel to run units at 80 per cent capacity

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The cold rolling mill complex at JSW steel. File photo
The Hindu
The cold rolling mill complex at JSW steel. File photo

JSW Steel today said it will operate its steel units in Karnataka’s Vijayanagar district and Tamil Nadu’s Salem at around 80 per cent of their design capacity of 11 million tonnes per annum due to a shortage of iron ore.

However, the company has not revised its steel production guidance of 9 MTPA for the year right now as it feels that some more relief on iron ore mining will come from the Supreme Court in the coming days, JSW Joint Managing Director M.V.S. Seshagiri Rao said.

“We feel that some more relief may come when the Supreme Court hears the illegal mining matter next time, as the court is also aware of about the problems of the industry. Therefore, we are not changing the production guidance (of 9 MTPA) for the year as of now,” he said.

Last week, while partially lifting its ban on iron ore mining in Karnataka’s Bellary district, the Supreme Court had allowed only state-run NMDC to carry out mining activities in the region with a cap of 1 million tonnes per annum and with the condition that the produce would not be exported.

“This will provide much-needed relief to the steel and allied industries in Karnataka, who were on the verge of closure,” Mr. Rao said, while welcoming the apex court’s order.

He added that the move will be able to meet only 60 per cent of the demand of steel and allied industries in the state, as the iron ore requirement in Karnataka is about 33 million tonnes (MT), while the supplies will be about 19 to 20 MT annually following the apex court’s order.

JSW Steel, whose 10-MTPA Vijayanagar plant is in the vicinity of Bellary, was among the units worst hit by the blanket ban on coal mining imposed by the Supreme Court late last month in the Bellary-Hospet region.

This created a shortage of iron ore for steel and allied industries in southern states, as many units across Karnataka, Goa and Tamil Nadu were dependent on supplies from Bellary.

JSW Steel also shut down two of its four blast furnaces of 2.3 million tonnes production capacity, as it did not have enough stocks of iron ore left.

Asked how the company plans to deal with the shortage of iron ore, as its requirement is about 18 MT per year, Mr. Rao said the company is looking for increased supplies from NMDC, with whom it has a long-term contract.

“Our agreement with them is for sourcing of 8 MTPA of iron ore, with our fourth blast furnace getting operational. We expect to get the supplies proportionate to our capacities from them (NMDC), at around 6-7 MT this year,” JSW’s Joint MD said.

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