The shortage of iron ore has stalled JSW Steel?s proposed plant in West Bengal?s Salboni region indefinitely, more than six years after the Sajjan Jindal-controlled company first outlined its plans to construct the 10-million-tonne plant and a 1,600-megawatt (MW) captive power plant in the region.
?Suddenly, iron ore availability has become scarce. In addition to this, moving iron ore from one state to another is difficult. So in this context, it will be very challenging even to tie up funding. Nobody knows how this project could get iron ore as West Bengal doesn?t have it,? JSW Steel?s joint managing director and CFO Seshagiri Rao told FE recently.
The company has already spent R600 crore on the project and acquired around 4,300 acre of land for it. According to JSW officials, the average cost of buying the land was R3 lakh per acre.
?We have acquired land, developed the site, and a colony for employees. Then we have spent a lot of money on development and exploration of coking coal mines. But unless we are assured an iron ore contract for this project, we can?t go ahead,? Rao said.
The steel major has also put on hold its expansion plans for the Vijaynagar plant due to iron ore availability issues. The company has been forced to pay higher prices for the key raw material at e-auctions ever since a mining ban was imposed in Karnataka and Goa in 2011.
?We have put the expansion of Vijaynagar plant, from 10 million tonne (mt) to 12 mt, on hold. Currently, we are operating the plant at 80% capacity,? said Rao.
The Supreme Court had permitted resumption of operations at 117 mines in Karnataka, subject to compliance with the terms and conditions stipulated by the empowered committee. Despite this, mines have been slow to restart as many operators have seen their licences expire and need to renew them before resuming operations.
?We were happy when the top court lifted the mining ban in April. But today, even after five months, only 12 mines are operating in Karnataka. Due to shortage of iron ore, we haven?t been able to operate the existing 10 mt at full capacity,? Rao added.
Meanwhile, mining in Goa ? which accounted for more than half of India?s iron ore exports ? remains stalled as it awaits a verdict from the apex court. In Orissa, too, following the state government?s decision to ban iron ore exports in October 2012, mining has been allowed only for captive use.