Posted on 17 Aug 2021
Odisha’s Steel and Mines Department says that due to the shortage of iron ore in the fiscal year through March 2021 (FY21), iron ore pellet, sponge iron and steel plants could not produce as per their installed capacities. About 40% of the installed steelmaking capacity remained unutilised due to the shortage.
Out of the total installed steel capacity of 33 million tonnes/year, Odisha-based steel plants produced 20.5m t/y in FY21, Kallanish notes. Similarly, pellet production clocked 22.76mt out of the total 31.69m t/y of installed capacity, while sponge iron production was noted at 7.82mt out of 15m t/y.
Owing to the underutilisation of the installed capacities, the state government lost INR 7,770 crores ($1.05 billion) of revenue in the form of Goods and Services Tax (GST).
“In the last fiscal year, Odisha merchant mines produced 23% less iron ore compared to FY20,” says the department. “During the year, around 80% of the iron ore produced in Odisha was taken outside the state. This has created a severe shortage of iron ore for Odisha-based plants as evidenced by the highest-ever surge of iron ore prices in the state.”
Owing to the shortage, small- and medium-sized steel mills fear closure of their units. Most of the iron ore produced by merchant mines in Odisha is sold to plants in Karnataka, Gujarat, Chhattisgarh and Maharashtra.
“Post the iron ore mine auctions in March 2020, the availability of iron ore in Odisha has come down,” says a local sponge iron manufacturer. “Most iron ore mines from the auction went to two-to-three large non-Odisha steel players who bid unviable premiums of more than 100% and are now operating these merchant mines as their captive mines to the detriment of MSMEs and Odisha-based plants.”
Industry experts estimate that Odisha-based steel industries will fail to utilise their full capacities again in FY22 and the government will continue losing thousands of crores of revenue.
Source:Kallanish
