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JSW Steel has started sourcing iron ore from NMDC's Bailadila mines in Chhattisgarh to maintain production at its plant near Bellary, Karnataka.
JSW has tapped alternative sources to secure iron ore supplies following the Supreme Court ban on mining in Bellary district on environmental grounds.
“We have started supplying two to three rakes of iron ore daily, amounting to 8,000-10,000 tonnes from Chhattisgarh to JSW Steel,” said Mr S. Thiagarajan, Director Finance at NMDC Ltd, the country's largest miner.
JSW Steel is one of NMDC's large customers in Karnataka. The annual supplies from NMDC's Donimalai mines to the JSW Steel plant were about 2.5 million tonnes. The Supreme Court ban has restricted the iron ore supplies.
JSW, which has iron ore stocks for about a week, is reportedly looking to source the raw material from states such as Goa, Orissa and Jharkhand.
“There is a lot of pressure to source ore. They are even willing to take the iron ore from Chhattisgarh to their plant in Salem,” Mr Thiagarajan said.
Last month, JSW fired its fourth furnace of 3.2 million tonnes per annum (mtpa) at Bellary plant increasing its installed capacity at to 10 mtpa. Analysts said sourcing iron ore from far off places would result in increased raw material costs for JSW Steel due to higher transportation costs, thereby impacting the profit margins.
The JSW Scrip hit a new yearly low of Rs 668 on BSE on Tuesday before recovering to close at Rs 674.30, a loss of 3 per cent over previous close. The scrip has shed over 23 per cent in past few sessions.
Supply to KIOCL
NMDC has also started iron ore supply from Chhattisgarh to Kudremukh Iron Ore Company Ltd (KIOCL)'s pellet plant near Mangalore. KIOCL is also among top NMDC's client in Bellary. “We are supplying two rakes daily to KIOCL,” Mr Thiagarajan said.
Separately, at a press conference, Mr Rana Som, Chairman and Managing Director, NMDC refuted the allegations of Karnataka Lokayukta on under-invoicing of exports. Mr Som said he would soon meet the Karnataka Lokayukta to clear the air on the issue.
Mr Som reiterated that exports to Japan and Korea were done through the state-owned MMTC after being approved by Union Cabinet and that the prices were fixed by a high-level delegation of officials.
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