JSW Steel Limited said the company’s board has approved a plan to build a pipeline from its Vijayanagar plant in Karnataka to the coast to facilitate the import of cheaper iron ore from Odisha and Eastern India.
“This Slurry Pipeline can be set up within 24 months at an estimated cost of Rs 2,100 crores. This will facilitate transporting iron ore through Slurry Pipeline at a very competitive 15% cost of alternate means of transport.
“This strategic project will enable the company to source almost 50% of the current requirement of iron ore at Vijayanagar works from outside Karnataka either from imports or from Odisha and the eastern sector at prices lower than the prevailing prices in Karnataka,” it said.
Slurry pipeline uses a liquid, such as water, to transport a solid substance such as iron ore.
JSW Steel is a part of the diversified JSW Group, which makes steel, energy and cement. The group has an installed steel-making capacity of 18 MTPA. JSW Steel’s plant at Vijayanagar accounts for 75% of this, and is one of the largest single location steel producing facilities in the country.
It said mining companies in Karnataka are “squeezing the iron and steel industry” in the state, taking advantage of the scarcity of iron ore in the state after the Supreme Court imposed curbs on production.
The Supreme Court imposed cap of mining 30 millon tons of iron ore per year in Karnataka to curb rampant illegal mining.
However, “even after a lapse of over 4 years, the current rate of iron ore production in Karnataka is still around 27 MTPA, far lower than the demand by the user industries,” JSW Steel said.
“As the demand for iron ore is far in excess of supply, the mining companies have started charging differential price for the iron ore produced and sold in Karnataka relative to the prices prevailing in Odisha and Chhattisgarh, contrary to the intent of making available legally mined ore at competitive price.
“For instance, the price of 63% grade iron ore loaded into wagon (including royalty) in the state of Odisha is Rs.1,575 per tonne. The base price for a similar grade in the state of Karnataka on comparable basis is Rs.3,050 per tonne,” it said.
The plant has been set up with substantial investments relying upon consistent supply of iron ore at a fair price, the company said.
JSW Steel said the apex court gave special dispensation to the state owned mining entities — National Mining Development Corporation and Mysore Minerals Limited — to produce in excess of their statutorily permitted quantities within the overall ceiling of 30 MTPA.
“The only way to check this arbitrary pricing of iron ore in Karnataka is to increase the supplies from alternate sources. JSW Steel will work towards establishing the slurry pipeline in a time bound manner,” it said.
It also said it will explore the possibility of setting up a similar slurry pipeline for transporting coal from coastal Karnataka to Vijayanagar.