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Auction route makes it tougher for Vizag Steel to get captive iron ore mines-The 19th China(Guangzhou)Int
’l Metal &Metallurgy Exhibition
8/8/2017 steel expo-metal &metallurgy expo |
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Business Standard reported that Vizag Steel Plant, the only steel manufacturing facility among the public sector unit steel plants that have no captive iron ore mine, sees little chances of getting one under the present auction route owing to unmatched competition from private players. Established in the port city of Visakhapatnam about 35 years ago, this Navaratna steel plant has been running on iron ore supplies from NMDC since the beginning. While there were no clear reasons as to why this PSU steel unit was not allocated a captive mine all these years, the effort to secure a mine in a recent auction in Odisha made its management realize that the task has only become tougher.
An official of Rashtriya Ispat Nigam Limited told Business Standard "We have participated in a recent auction for a mine in Odisha in the hope of putting a good show. But private steel maker Bhushan Steel has quoted a price 300 per cent higher than what we were willing to pay for the mine. We cannot compete with private companies as we are constrained by our own assessment of economic viability of the mine and other norms.”
The initial experience of public sector iron ore company NMDC was also not very different from that of Vizag Steel since the auction was mandated for allocation of all mining assets six months ago. NMDC official said “We have recently participated in an auction for a mining lease for tungsten reserves in Maharashtra. To our surprise a private company has quoted a starting price that itself was 100 per cent higher than what NMDC was willing to pay for the asset.”
The factory officials maintain that the production cost was 30 per cent higher than those who own captive mines. Last year NMDC has supplied 6.5 million tonnes of iron ore to Vizag Steel Plant from its Donimalai mines in Chattisgarh located some 500 km away. It sold iron ore at an average price of INR 2,100 per tonne at the pit head. The steel plant incurs another INR 1,200-1,300 on transportation besides INR 600 on royalty on every tonne, spending a little over INR 4,000 per tonne by the time the iron ore reaches the factory premises.
-The
19th China(Guangzhou)Int’l Metal &Metallurgy Exhibition
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