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JSW’s Vijayanagar steel plant faces heat as Mormugao terminal shuts operations

P. Manoj | | Updated on: Dec 06, 2021

JSW Group-owned South West Port Ltd has stopped cargo handling operations at Mormugao Port Trust from April 1, after the Goa State Pollution Control Board (GSPCB) revoked consent to operate the facility citing non-compliance with approval terms.

The two multi-purpose berths run by South West Port from 2004 play a key role in bringing raw materials and shipping finished products for JSW’s 12 million tonne (mt) steel plant at Vijayanagar in neighbouring Karnataka.

South West Port has filed an application with the National Green Tribunal (NGT) requesting permission to re-start the facility for handling 5.48 mt of cargo, the maximum volume set by GSPCB while granting permission to operate initially. South West Port, according to GSPCB, has been handling cargo in excess of this limit, sometimes even double the cap, posing health hazards to people of Vasco town. The excess cargo handled can invite a penalty of ₹5,000 a day.

South West Port has refuted the charge that handling more than the GSPCB cap was raising pollution levels since most of the cargo is evacuated by rail wagons. “We run the facility in a safe and clean manner. We don’t use road at all for evacuating coal; we use only rail,” a JSW official said.

Since shutting Momugao operations, JSW has been shipping its cargo through Krishnapatnam port and New Mangalore Port Trust, entailing extra costs. “Despite hardships, we are meeting the requirements of the steel plant,” the JSW official said.

“The steel plant is yet to feel the impact of the terminal shut down. But production could be impacted if a solution is not found soon,” said a steel industry official. JSW said its “first priority” is to get the Mormugao cargo via some other ports/terminals. “In parallel, our mergers and acquisitions team is in full swing, exploring potential opportunities in South India. We will pick the best option based on landed costs. Steel is not a high margin business. Logistics cost is a big component, so we will be impacted if the price is high. It will reduce our export competitiveness,” the JSW official said.

Port experts say that JSW’s acquisition options in the South are limited given the high revenue share some of the available facilities pay government-owned ports and huge asset valuations.

South West Port shares 18 per cent of its annual revenue with the Mormugao Port Trust, while other similar facilities such as the one at Kamarajar Port near Chennai, the revenue share exceeds 50 per cent. This was the main reason that led JSW to call off talks to buy the coal terminal run by Chettinad Group at Kamarajar Port which shares 52.524 per cent of its annual revenue with the government-owned port company.

Published on April 12, 2018
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