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Updated: April 18, 2013 12:37 IST

Tapan Sen for strategic alliance between RINL and NMDC

Santosh Patnaik
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Tapan Sen
Tapan Sen

‘It will be mutually beneficial for both the PSUs’

CITU general secretary and CPI (M) MP Tapan Sen says a strategic alliance between Rashtriya Ispat Nigam Limited and National Mineral Development Corporation will be mutually beneficial in cutting cost and serving their own interests.

In an exclusive interview to The Hindu, Mr. Sen, who was here to attend the Executive Council meeting of the Trade Union International (Metal & Mining), said: “NMDC is a profit-making unit owning huge iron ore reserves – the basic material required for making steel. On the other hand, RINL is starved of iron ore for want of captive mines. An understanding between the two Andhra Pradesh-headquartered public sectors coming under the same Ministry will be mutually beneficial.” NMDC is now looking for investment opportunities for setting up a Greenfield steel plant. RINL has long-term agreement for supply of iron ore from NMDC’s mines in Chhattsighar’s Bailadilla reserves.

A tonne of iron ore costs around Rs.300 to Rs.350 for those having captive mines whereas RINL spends a staggering Rs.6,000. “Production efficiency and the margin of profit will be better if RINL has captive mines or a strategic understanding with NMDC,” he averred. Mr. Sen, an expert on steel industry, said they were also advocating RINL and steel major SAIL sign a strategic alliance for marketing. “Unfortunately, if serious efforts are made for coming to such an understanding, the private lobby will put spokes in such attempts to safeguard their vested interests,” he stated.

RINL, with all its operational efficiency, was not able to harness its full potential for so many years as it was denied raw material security by the powers-that-be. He said all through, RINL could manage to fund its Rs.12,500-crore 6.3 million tonne expansion project through internal accruals.

He said the government should focus on raising the demand for steel in the domestic market by increasing public investment and refrain from encouraging FDI.

“In such a grim scenario, how anyone can you think of reducing fiscal deficit by resorting to heavy dose of taxation and phasing out subsidies,” he wondered.

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