Monday, 09 May 2011
BS reported that most of the sponge iron manufacturers in Karnataka are facing a threat of closure thanks to the shortage of iron ore supplies to their mills.
Mr T Srinivas Rao president of Karnataka Sponge Iron Manufacturers’ Association said that “There are as many as 51 medium scale units with a combined production capacity of 12,600 tonnes per day, able to work at a utilization rate of 25% every day.”
He said “As against the daily requirement of 40,000 tonnes of iron ore these units are able to procure only about 10,000 tonnes per day that is about 25%. This is mainly because of the cut in the extraction of iron ore as a result of the ban on the export by the state government. Also, most of these units procure iron ore from state owned Mysore Minerals Limited, which has been following a differential pricing mechanism.”
Mr Rao told Business Standard that “Sponge iron makers in Karnataka are able to produce only about 2,500 tonnes per day due to the shortage presently. We are largely dependent on MML for ore. But, they do not give us priority while supplying iron ore. Instead, they supply ore to large steel companies.”
He alleged that “MML has been following a differential pricing system for large steel companies and sponge iron makers. It supplies ore to big companies at 50% of the market price, while charging international market rates for the same to the sponge iron units. This is because MML has long term supply contracts with large steel companies like JSW and Kalyani Steels.”
Mr Rao said that “MML’s policy stipulates an allotment of about 30% of its annual iron ore production to medium scale steel manufacturers. But it has not been honoring this policy. Instead it favors large steel mills. The medium scale sponge iron manufacturers get only 5% to 10% of the allotment of the 30% allocation from what the state owned mineral corporation mines. This discriminatory policy of MML has pushed sponge iron ore industry to the brink and of the 50 units at least seven have wound up and a majority of the operational units have become non-performing assets.”
Mr Sriraman MD of MML said that “We have been conducting electronic auctions periodically and 15 companies buy from us. There is no provision for subsidizing the medium scale firms. They have to buy at the prevailing market prices decided by the government.”
Mr Rao urged the state government to consider the applications of sponge iron units for captive mining leases for which they had applied about six years ago.
He also urged the government to allot a minimum of 50% of iron ore mined by the mining lease holders to medium scale industries as a majority of mine owners export iron ore.
During the auctions in February this year the MML sold 59 to 60 Fe grade iron ore at INR 2,250 a tonne. Every year it sells about 350,000 tonnes through e-auctions.
The Karnataka based sponge iron units contribute 20% of the national production at 22 million tonnes per annum.
(sourced business-standard)
BS reported that most of the sponge iron manufacturers in Karnataka are facing a threat of closure thanks to the shortage of iron ore supplies to their mills.
Mr T Srinivas Rao president of Karnataka Sponge Iron Manufacturers’ Association said that “There are as many as 51 medium scale units with a combined production capacity of 12,600 tonnes per day, able to work at a utilization rate of 25% every day.”
He said “As against the daily requirement of 40,000 tonnes of iron ore these units are able to procure only about 10,000 tonnes per day that is about 25%. This is mainly because of the cut in the extraction of iron ore as a result of the ban on the export by the state government. Also, most of these units procure iron ore from state owned Mysore Minerals Limited, which has been following a differential pricing mechanism.”
Mr Rao told Business Standard that “Sponge iron makers in Karnataka are able to produce only about 2,500 tonnes per day due to the shortage presently. We are largely dependent on MML for ore. But, they do not give us priority while supplying iron ore. Instead, they supply ore to large steel companies.”
He alleged that “MML has been following a differential pricing system for large steel companies and sponge iron makers. It supplies ore to big companies at 50% of the market price, while charging international market rates for the same to the sponge iron units. This is because MML has long term supply contracts with large steel companies like JSW and Kalyani Steels.”
Mr Rao said that “MML’s policy stipulates an allotment of about 30% of its annual iron ore production to medium scale steel manufacturers. But it has not been honoring this policy. Instead it favors large steel mills. The medium scale sponge iron manufacturers get only 5% to 10% of the allotment of the 30% allocation from what the state owned mineral corporation mines. This discriminatory policy of MML has pushed sponge iron ore industry to the brink and of the 50 units at least seven have wound up and a majority of the operational units have become non-performing assets.”
Mr Sriraman MD of MML said that “We have been conducting electronic auctions periodically and 15 companies buy from us. There is no provision for subsidizing the medium scale firms. They have to buy at the prevailing market prices decided by the government.”
Mr Rao urged the state government to consider the applications of sponge iron units for captive mining leases for which they had applied about six years ago.
He also urged the government to allot a minimum of 50% of iron ore mined by the mining lease holders to medium scale industries as a majority of mine owners export iron ore.
During the auctions in February this year the MML sold 59 to 60 Fe grade iron ore at INR 2,250 a tonne. Every year it sells about 350,000 tonnes through e-auctions.
The Karnataka based sponge iron units contribute 20% of the national production at 22 million tonnes per annum.
(sourced business-standard)
Posts
No comments:
Post a Comment