JSW Steel plans to set up a slurry pipeline to transport iron ore from the west coast of the country to counter the impact of higher cost of iron ore produced and sold in Karnataka. The company will invest close to `2,100 crore for the slurry pipeline that would take around 24 months for completion. Sajjan Jindal, chairman of JSW Group said that taking advantage of a cap on mining of iron ore in Karnataka, state-owned, NMDC is charging a differential price of `1,475 per tonne from buyers in Karnataka, besides there is an additional forest tax imposed by Karnataka government, which raises the cost of iron ore substantially. It has also led to closure of many small sponge iron players in Karnataka. “NMDC is not following the market trend and is taking advantage of the current situation, which is not expected of a government entity,” Jindal said. In 2013 to curb illegal mining and facilitate transparent sale of iron ore Supreme Court had imposed several restrictions on mining in Karnataka that included a cap of 30 MTPA per annum. However, the apex court had given a special permission to the state owned mining entities National Mining Development Corporation and Mysore Minerals Limited to produce in excess of their statutory permitted quantities within the overall ceiling of 30 MTPA.
“Even after a lapse of over four years, the current rate of iron ore production in Karnataka is still around 27 million tonne per annum, far lower than the demand by the user industries,” Jindal said. As the demand for iron ore is far in excess of supply, the mining companies have started charging “Even after a lapse of over four years, the current rate of iron ore production in Karnataka is still around 27 million tonne per annum, far lower than the demand by the user industries,” Jindal said. As the demand for iron ore is far in excess of supply, the mining companies have started charging differential price for the iron ore produced and sold in Karnataka relative to the prices prevailing in Odisha and Chhattisgarh, “contrary to the intent of making available legally mined ore at competitive price,” Jindal said. The price of 63% grade iron ore loaded into
The price of 63% grade iron ore loaded into wagon (including royalty) in the state of Odisha is `1,575 per tonne. The base price for a similar grade in the state of Karnataka on comparable basis is `3,050 per tonne. In addition to this differential price of `1,475/- per tonne, the government of Karnataka charges Forest Development Tax of 12%. This slurry pipeline will facilitate transportation of iron ore at 15% cost of alternate means of transport. This project will enable the company to source almost 50% of the current requirement of iron ore at Vijayanagar works from outside Karnataka either from imports or from Odisha/eastern sector at prices lower than the prevailing prices in Karnataka, the company said in a statement. The only way to check this arbitrary pricing of iron ore in Karnataka is to increase the supplies from alternate sources, the company said.