Iron ore price hike taking heavy toll on RINL
The steep increase in iron ore prices by mining major NMDC Limited will cast a huge burden on RashtriyaIspat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant, popularly known as Vizag Steel
Visakhapatnam : The steep increase in iron ore prices by mining major NMDC Limited will cast a huge burden on RashtriyaIspat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant, popularly known as Vizag Steel.
"NMDC has increased iron ore prices by 100 per cent i.e. doubled in recent months...this has a huge burden on steel producers like RINL," according to a recent tweet by Katam SS Chandra Rao, joint secretary, Steel Executives' Federation of India (SEFI).
RINL, which has a production capacity of 7.3 million tonne per annum from its shore-based integrated steel plant here, is the only major steel producer without captive mines-a demand which remained unanswered for several decades due to a variety of reasons.
RINL has an agreement with NMDC to source lion's share of its iron ore requirement from Bailadila mines in neighbouring Chhattisgarh's Bastar region. Rao told Bizz Buzz that Vizag Steel did not have captive mines for iron ore and coking coal. Both thematerials are not only major raw materials for iron and steelmaking but also have a high impact on cost of production.
RINL/Vizag Steel, one of the best steel plants, has been suffering due to lack of captive iron ore and coal mines. RINL's raw material cost is 63 per cent of total cost whereas that of SAIL's and TATA's is 48 per cent and 35 per cent respectively (both companies have their captive mines), he informed.
He stated that RINL was losing about Rs800 crore to Rs1000 crore per annum exclusively onaccount of lack of iron ore. Though RINL has been performing well, only on account of high input cost on material, it was faced with a liquidity crunch.
"Non-allotment of captive iron ore mines since long time, capital investment of more than Rs 30,000 crore as per the Government of India Steel Policy ( Expansion to 6.3 mt, and 7.3 mt by modernisation), dumping of cheap steel products from China and global crisis, the plant has gone into deep financial crisis since 2016," he stated.