JSW Steel may source iron ore from merchant miners for Odisha plant

The Sajjan Jindal-led JSW Steel is likely to buy iron ore from merchant miners in Odisha to cater to the requirement of its 10 million-tonne-per-annum (mtpa) steel plant and a pellet unit proposed in the state. The company has pegged its annual iron ore requirement for the two facilities at 30 million tonnes.

"JSW Steel has initiated discussions with a few merchant iron ore producers in Odisha. They are looking to secure long-term raw material supplies for their proposed greenfield steel plant", said a source close to the development.

JSW Steel, however, refused to comment on the development. A questionnaire sent via e-mail went unanswered.

The steelmaker is looking at multiple options to firm up iron ore supplies. It is also open to bidding for iron ore blocks offered by the Odisha government. JSW Steel was interested in winning the bid for two iron ore reserves that were put to auction with integrated steel plant as an end-use. Essar Steel and Bhushan Steel, both companies facing insolvency proceedings, have emerged as preferred bidders for the two blocks.

Previously, JSW Steel, in a communication with the state government, had sought a long-term iron ore linkage pact with the state-run Odisha Mining Corporation (OMC). The steel company has asked for an agreement, running up to 50 years, for the supply of 30 million tonnes of iron ore fines at the Indian Bureau of Mines (IBM) declared prices. JSW Steel has suggested that the OMC may engage a mine developer-cum-operator (MDO) on a long-term basis to develop its large mines like Gandhamardhan and Dubuna.

But OMC, which currently produces around 5-6 million tonnes of iron ore each year, is constrained to meet the entire ore requirement projected by JSW Steel. The mining company also has long-term supply commitments towards steel and other end-use industries in Odisha.

In Odisha, Essar Steel, Visa Steel, Jindal Steel & Power Ltd (JSPL), Bhushan Steel Ltd and MMTC promoted Neelachal Ispat Nigam Ltd (NINL) are among the steel industries buying iron ore from OMC through long-term linkage. Tata Steel is also examining the possibility of clinching a long-term pact with OMC to secure iron ore for its Kalinganagar plant. On a trial basis, the steelmaker has signed an agreement with OMC that will remain valid for one year.

JSW Steel has pledged an investment of Rs 50,000 crore on the Odisha steel plant and associated facilities. The company has asked for around 4,500 acres of land for the integrated steel project to be set up close to Paradip. To optimise raw material costs, JSW Steel has committed an investment of Rs 3,700 crore on a slurry pipeline for transporting 30 million tonnes of iron ore each year from Joda to Paradip. Both the steel project and the slurry pipeline have been approved by the High-Level Clearance Authority (HLCA), which is the apex body to clear investments in Odisha.

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