Shrinking capacity utilization is adversely affecting entire Steel industry. Sponge iron production is down about 41.3 per cent of installed capacity for FY13.
Despite SC’s (Supreme Court) approval on continuation of mines operation in April this year, all Steel mills in Karnatka are continue to operate at almost half of their installed capacity owing to brutal shortage of Iron ore.
However, JSW Steel has performed considerably better than its peers. Vinod Nowal, Deputy MD & CEO, JSW Steel expressed his deep concern on crisis of raw material and its adverse affect on Steel Industry. As per Nowal, Iron ore availability is about 15 MnT, which is hardly sufficient to achieve 50-60 per cent of capacity utilization for steel mill. To remain competitive, it is required to produce at least 90-95 per cent of capacity. “Raw material shortage and poor capacity utilization is killing Steel industry” he added.
On account of severe crisis of Iron ore in the state, company is forced to outsource raw material from other states. Presently, JSW is managing to produce 80-85 per cent with outsourced raw material.
It is learned that Karnataka government is seeking permission from SC to increase Iron ore production for 2 years. Steel industry requires about 35 MnT Iron ore per annum to achieve full capacity utilization. Approval process from SC needs to hasten, as governments are losing revenue of INR 6,000 per MT of Steel produced. Government should immediately expedite pending clearances of other mines also, so that increased supply will help in prices stabilization.