Apart from NMDC, Anil Agarwal-led Vedanta, MSPL Limited and Bellary Iron Ore pvt ltd are some of the iron ore miners in Karnataka.
The total capacity of Karnataka iron ore mines can be extended upto 40-45 million tonne. In 2016-17 and 2017-18 the state produced around 27-28 million every year.
“There is no discussion with regard to price revision of Karnataka ore at the moment,” informed Sumeet Dev, general manager-commercial at NMDC without divulging much information. The steel manufacturing industry in Karnataka is, however, of the view that miners should align their prices taking the quality of ore into consideration.
“The ore in Odisha is 62-63 fe (ferrous) grade whereas Karnataka ore is much lower at about 59.5 fe grade. Moreover, with higher moisture, alumina, and silica content in the ore, the Karnataka ore is feeble on several quality parameters compared to the Odisha or imported ore. With this kind of inferior quality ore, the price at which Karnataka ore is being sold to the steel industry is not justified," explained Seshagiri Rao, group chief financial officer and joint managing director of JSW Steel.
Sajjan Jindal-led JSW Steel is the largest buyer of Karnataka ore and it lifts about 60-70 percent of the produced ore to cater to its 12 million plant at Vijay nagar.
Kalyani Steel and Kirloskars among others are some of the smaller steel manufacturers in Karnataka state that lift the auctioned ore.
“Though on the face of it, it may look like JSW is buying outside ore at a higher price than Karnataka, the benefit in productivity due to superior quality ore works out at Rs 2,600-2,700 per tonne. This is my gains in operations. And so, overall it works out to be cheaper for JSW,” explained Rao.
The company was said to be buying imported and Odisha iron ore for a price at about Rs 4,000-4,500 per tonne as against Karnataka ore for Rs 3,000 per tonne.
“We have been buying NMDC ore since 2011 for Karnataka plant as we had no option. Now that we have tested and figured that buying from outside is more beneficial and productivity is better, we have chosen the other option,” Rao informed.
The benefits experienced by JSW production team by sourcing ore from outside has been tremendous especially in terms of blast furnace production, lower slag volumes due to low impurities, lower fuel rates due to low alumina and consistent qualities and increased efficiency of operations due to certainty of feed mix.
"The productivity benefits have brought us to a conclusion that sourcing material outside Karnataka is far better than using inferior material at such inflated prices," said Rao.
India has three major iron ore regions --Odisha, Chhattisgarh and Karnataka. Iron ore is the key raw material used in the making of steel.