All’s not well with Tata Steel, India’s 3rd largest steel producer with an annual production of around 9.1 MnT. Tata Steel that has captive mines in the state of Odisha & Jharkhand, which is sufficient to fulfill current requirement of Iron ore, has been looking for various sourcing options in domestic & global market.
The Supreme Court’s directive on suspending mining operations in Odisha, which also included Tata’s key mines (later been permitted by the state government to resume operations) is not the only reason why Tata Steel is looking for different sourcing options.
Sources close to this matter highlighted that after Goa & Odisha, the Jharkhand government may take action for mines running under second deemed renewal, which is also a major cause of worry for Tata Steel.
Tata Steel participated in NMDC’s Latest Advance E-auction
NMDC, which conducted advance e-auction on 6 Jun, 2014 for about 1,36,000 MT of Fines & Lumps from its mines located in Kirandul and Bacheli of Bailadila region in Chhattisgarh, have received active participation from Tata Steel, JSW Steel and a couple of other steel makers.
Sources close to this matter mentioned that Tata was awarded about 40,000 MT of Iron ore (32,000 MT Fines and 8,000 MT Lumps) at slightly above than NMDC’s June prices. Rest was awarded to JSW Steel and a couple of more steel makers.
Looking at current NMDC prices, landed cost of Iron fines of grade 64% to Tata Steel’s Jamshedpur plant would not be less than INR 5,600-5,700/MT (including royalty).
“This is a surprise move by Tata, we wonder why would they not take Iron ore from Odisha, which would cost them less than INR 4,000/MT delivered to their plant (Fe 63% Iron fines, including royalty),” said an industry veteran.
Tata Steel Imports continue to Rise
Tata Steel imports of Iron ore have continued to increase over speculation that mines in Jharkhand running under second deemed renewal may have to face some problems. According to trade sources, the company has consistently been import ore from Australia based Polaris Metals Pty Ltd from its Carina mines located in Western Australia.
Cargoes are loaded from Kwinana port, Australia to Paradeep and Haldia port. Trades sources highlighted that cargoes which were imported in the month of April & May are concluded at USD 107-109/MT CFR Paradeep/Haldia, whereas shipments made in June are concluded at around USD 97/MT CFR Paradeep port.
It is cheaper for Tata Steel to import at Haldia port as transport cost from Haldia port to Tata’s plant is cheaper by about INR 300-400/MT from any other port.
Railway Freight
Haldia Port – Tata Plant- INR 500-600/MT
Paradeep Port – Tata Plant- INR 900-1,000/MT
Dharma Port- Tata Plant- INR 700-800/MT
NMDC (Bailadila Mines) – Tata Plant- INR 2,100-2,200/MT
* For reference purpose only
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