Steel lobby, CII in spat over ore export
The war for iron ore is fostering a growing divide among India’s steel makers, with battle lines drawn between the Indian Steel Alliance (ISA) and CII Steel Committee.
By Shalini Singh, TNN |
NEW DELHI: The war for iron ore is fostering a growing divide among India’s steel makers, with battle lines drawn between the Indian Steel Alliance (ISA) and CII Steel Committee. The Hoda Committee has recommended unfettered export of iron ore Fines and CII’s inability to influence the move has catalysed the adversorial positions.
The CII Steel Committee, chaired by B Muthuraman, MD, Tata Steel, has actively engaged the Hoda Committee. It secured captive iron ore mines for all steel makers, dislodging Hoda panel’s attempt to ban captive mining. A huge victory, had clever riders not spoilt the steel party.
For one, captive mines are permitted only to those with established steel capacities as on July 1, 2006. Second, permissible extraction is restricted to amounts required to support existing capacities. This means iron ore at extraction prices is not available to steel makers as they expand.
Finally, steel units must locate plants within the state that allots the mine. Since three of ISA’s members, Essar, Ispat and RINL are located in non-mineral rich states, they find themselves shortchanged by CII’s ‘weak’ lobbying. Another member, Jindal Steel Works, though located in Karnataka, is unlikely to secure a captive mine considering a political unwillingness to grant leases in that state.
That’s why all hope now rests on preventing iron ore exports, despite CII’s consent on the issue. If exports are banned, miners will be forced to sell ore or even hand over mining leases to steel makers.
The Hoda Committee favours exports of Fines and lower grade iron ore lumps on the grounds that it has no takers. Fines account for 85% of iron ore exports as most steel makers use high grade lumps.
However, ISA feels compromised by CII and steel ministry for not fighting against its export. JSW is one of few producers to use iron ore Fines, after heavy investments in a sintering plant, while Ispat, Essar and JSW intend to follow suit. “CII Steel Committee does not represent the steel industry. ISA is the representative body for integrated steel units and we were not given any representation in Hoda Committee,” says president, ISA, Moosa Raza.
All iron ore exports, except the MMTC’s long term contracts, are exports of Fines to China. The steel ministry concedes these are unlikely to cross 100 million tonnes a year, eventually dying out as China firms up contracts with Brazil and Australia.
The CII Steel Committee, chaired by B Muthuraman, MD, Tata Steel, has actively engaged the Hoda Committee. It secured captive iron ore mines for all steel makers, dislodging Hoda panel’s attempt to ban captive mining. A huge victory, had clever riders not spoilt the steel party.
For one, captive mines are permitted only to those with established steel capacities as on July 1, 2006. Second, permissible extraction is restricted to amounts required to support existing capacities. This means iron ore at extraction prices is not available to steel makers as they expand.
Finally, steel units must locate plants within the state that allots the mine. Since three of ISA’s members, Essar, Ispat and RINL are located in non-mineral rich states, they find themselves shortchanged by CII’s ‘weak’ lobbying. Another member, Jindal Steel Works, though located in Karnataka, is unlikely to secure a captive mine considering a political unwillingness to grant leases in that state.
That’s why all hope now rests on preventing iron ore exports, despite CII’s consent on the issue. If exports are banned, miners will be forced to sell ore or even hand over mining leases to steel makers.
The Hoda Committee favours exports of Fines and lower grade iron ore lumps on the grounds that it has no takers. Fines account for 85% of iron ore exports as most steel makers use high grade lumps.
ADVERTISEMENT
However, ISA feels compromised by CII and steel ministry for not fighting against its export. JSW is one of few producers to use iron ore Fines, after heavy investments in a sintering plant, while Ispat, Essar and JSW intend to follow suit. “CII Steel Committee does not represent the steel industry. ISA is the representative body for integrated steel units and we were not given any representation in Hoda Committee,” says president, ISA, Moosa Raza.
All iron ore exports, except the MMTC’s long term contracts, are exports of Fines to China. The steel ministry concedes these are unlikely to cross 100 million tonnes a year, eventually dying out as China firms up contracts with Brazil and Australia.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
