The firm faces iron ore shortage, in talks with Odisha govt for mines in Keonjhar
Rashtriya Ispat Nigam Ltd (RINL), which doubled its production capacity to about 7.2 million tonne per annum last fiscal, is facing a key challenge of raw material insecurity as it doesn't own any iron ore mine.
The public sector undertaking is in talks with the Odisha government for earmarking a specific mine for it. Besides, it is taking efforts to restart some of the mines of its subsidiary Orissa Minerals Development Company (OMDC) where leases lapsed long back, Pradosh Kumar Rath, its newly-appointed chairman told DNA Money.
"Now that we have raised our capacity, ramping up of production would be our key focus this year. There is adequate demand in the market, we only have to produce it. But the most difficult issue currently is how to cope up with that higher volume of production. There are several challenges including the availability of raw materials. Now that scale of operations has more than doubled, the issue is how to secure iron ore logistically for such scale of operations," Rath, who took over as the head of Visakhapatnam-based RINL last week, said.
RINL, also known as Vizag Steel, which runs country's first coastal steel plant, is devoid of any captive iron ore mine. It has been sourcing most of the key raw material from state-run Odisha Mining Corp and also National Mineral Develop Corp.
To give RINL raw material security, the steel ministry helped the company take over another state-owned entity, OMDC, in 2011. While OMDC owns several iron ore mines, all its mining leases were lapsed and have not been revived yet, adding to RINL's woes.
"An important task for us is how to operationalise the iron ore mines of OMDC, a company which we had acquired paying Rs 360 crore," he said during his first media interview after taking over as chairman.
As a way out, RINL is in talks with Odisha Mining Corp for getting access to Gandhamardan iron ore mine in Keonjhar district.
"We have been getting our requirement from OMC but they sell mostly through e-auctions where we have to participate. But they also have a mine at Gandhamardan for which we are tying up on a trial basis. A mine in Andhra Pradesh has been allotted through the joint venture route. That may take a year to get clearances and start operations," he said.
Despite the troubles, the recent upswing in steel demand has helped RINL cut its losses and the state-run entity might be able to post good profits this year.
"After suffering losses, we have shown a profit of Rs 17 crore in the first quarter and hope to continue with the trend for the rest of the year," Rath said.
In the financial year (FY) 2018, RINL suffered losses of Rs 900 crore, down from Rs 1,260 crore in FY17.
DIGGING DEEPER
- 7.2 mtpa – RINL's production capacity
- Rs 900 cr – Its losses last fiscal; RINL posted Rs 17 cr profit in Q1 FY19
- Rs 360 cr – It has paid for acquiring OMDC
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