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C’garh,NMDC face off over iron ore

State threatens to take over PSU output; firm says state units offtake poor

Written by Priyadarshi Siddhanta | New Delhi |
March 6, 2013 12:58:17 am

The Chhattisgarh government has demanded that NMDC Ltd immediately start supplying iron ore to mineral-starved steel and sponge iron plants in the state and has threatened that if the state-owned miner fails to comply,the state government could take over the central PSU’s output and distribute it to units in the state.

Close to 100 steel and sponge iron units in Chhattisgarh are estimated by the state government to be hurt by the shortage of iron ore. Last November,these producers had informed the Raman Singh government that many of their units had been forced to shut while others faced closure.

They had blamed this on the NMDC apparently preferring to supply iron ore mined from the Bailadila mines in Dantewada district to its long-term customers outside the state.

“With mining remaining non-operative in the private sector,all Chhattisgarh based customers are fully dependent on NMDC for sourcing iron ore. NMDC should take this seriously. Otherwise,the state government will invoke the Right of Pre-emption by invoking Rule 27(1) of the state’s Mineral Concession Rules 1960,under which iron ore produced by the PSU will be taken over by the Chhattisgarh government and distributed to local customers,” Chhattisgarh mines secretary Munish Kumar Tyagi said in a January 8 letter to NMDC chairman C S Verma.

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The mineral resources department issued the notice following a directive from the state’s commerce and industry department,Tyagi told The Indian Express.

Verma,however,countered Tyagi’s contention. He said NMDC had been earmarking adequate iron ore for the state’s sponge iron plants. “In fact the lifting by Chhattisgarh’s units in 2012-13 has been very poor. We have allocated 30 lakh tonne (LT) of lump ore for them and 10 lakh tonnes of fines. Let them lift the entire allocated ore. About 90 per cent of NMDC’s production is being supplied to various domestic steel industries including small and medium units of the state,” he said.

From an annual allocation of 2.5 LT in 2003-04 to 30 LT in 2008-09,the allocation has gone up twelve fold,Verma added. The firm is currently operating three mines in Chhattisgarh,producing nearly 30 MT of iron ore per year and is planning to ramp up its production by an additional 10 MT within two years,according to a steel ministry official.

The state’s industrial promotion board had asked NMDC to provide iron ore to 68 units of the state during the current financial year and accordingly the quantity was earmarked,he said. “But only 49 units were lifting the mineral from NMDC and in January 2013,only 22 lifted their share of the allocation. The sudden slide in the offtake has impacted out production plans,which compelled us to resort to put up the residual ore for e-auction on January 11 and January 24,” Verma said in a letter to Tyagi on January 23.

He also said that an amount of over Rs 10 crore

is due from 18 units of the state for ore supplied during 2008-09.

Traditionally,Chhattisgarh sponge iron producers have been sourcing their ore from Orissa,but the Naveen Patnaik government has begun executing a royalty system that is in contravention of the mineral concession rules as rates are much higher than the national average. Besides,the state’s buyers contend that NMDC has pegged its prices way beyond their reach.

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