Department of Steel & Mines (Government. of Odisha) has amended the long term linkage policy of iron ore, chrome ore and other minerals to the state based eligible end-user industries of Odisha through OMC. State government has made amendment via notification dated 10 Aug’16.
Despite measures of state govt. The supply and price of raw material has exhibited strong volatility thereby bringing in the apprehension of financial uncertainty and instability for the industries.
Therefore in order to ensure sustained supply of raw materials, state govt. has approved the policy for long term linkage for the state based industries through OMC over a period of 5 years extendable to further period (s) of five years each.
Key highlights of the amended iron ore linkage policy of OMC:
1. The long term linkage should be for 5 years with the provision of annual review based on performance.
2. Quantity to be assured under long-term linkage should be determined by a committee constituted for the purpose by the government.
3. For the end users having captive mines- While deciding the linkage quantity, the authorized production capacity of the end users’ captive mines and the quantity of long term purchase agreements made by end user with other lessees within the state shall be deducted from the requirement and the balance requirement only may be committed under long term linkage.
In case end-user is unable to produce the mineral in its captive mines as per “authorized production capacity” due to reasons beyond its control, committee may allow linkage of the shortfall quantity by OMC through annual supply agreement. This will prove beneficial for Tata Steel’s Kalinganagar project.
4. OMC allowed to export unsold iron ore – The minerals remaining unsold by OMC after meeting requirement of long term linkage and annual supply agreement buyers and successful e-auction bidders may be disposed by OMC including export to overseas buyers directly or through MMTC at prices which may be decided by corporation.
5. 50-70% of saleable iron ore stock to be placed under long term linkage – Not less than 50% and not more than 70% of saleable stock will be placed under long-term linkage. Quantities offered but not lifted by allottees may be disposed through e-auction. The remaining saleable stock shall be sold through e-auction
6. Regarding long-term linkage pricing – Weighted average price derived from e-auctions will be the long-term linkage price for the appropriate grades.
7. End-user industries PSU’s will be eligible for long-term linkage – End-user PSU’s and small sized state based steel units which were earlier not eligible for entering into MoU owing small size of project will now be eligible for long-term linkage as well as to participate in the e-auction.
8. Within MoU signed steel plants, blast furnace based integrated steel plants will be given priority over others. MoU signed steel plants which are already in operation will be given preference over the MoU signed plants which are yet to be commissioned.
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