Cos told to step up output of ore, steel

Amid concerns over cheap Chinese steel being dumped into the country, govt has drawn up an elaborate plan to double iron ore production in the country and is prodding steel producers to use the capacity in allotted mines to lower the cost of production and step up output so that there is lower reliance on imports.
During a recent meeting chaired by commerce and industry minister Piyush Goyal and coal and mines minister G Kishan Reddy, steel companies were clearly told that the prices can come down if ore cost is reduced. For steel mills, a very aggressive target for exports has been suggested as production rises.

Currently, production in allotted mines is estimated at 50-55% of the capacity. Although the utilisation of private companies is not clear, there seemed to be enhanced focus on public sector entities such as SAIL, NMDC and Odisha Mining Corporation, in whose case it was also pointed out that they are unable to optimally use the capacity due to regulatory issues.

The production level for SAIL and NMDC was many times lower than ArcelorMittal or Rungta Mines, a source told TOI . All companies have been told to surrender unutilised mines, for which some show cause notices have also been issued. One concern for the industry is the high value of bids in the auctions as companies aggressively bid for the mines and are now realising that the rates are higher than the revenue earning capacity. “New mines will only be allotted after fully utilising earlier capacity,” said an official. Some of the curbs on sale of the ore are also proposed to be removed and SAIL has pointed to the additional royalty on sale being a concern, a source told TOI .

Some of the PSUs with large capacities have also been asked to ensure adequate supply within the country so that cost can come down, said a source. State govts are also being nudged to plan out future auction plans, with the environment ministry taking steps to reduce the time taken for clearances. Similar consultations to step up production are planned for some other sectors, including power, said a govt official.