Sajjan Jindal led JSW Steel has proposed to lay a slurry pipeline for transportation of iron ore and coal in Karnataka.
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 per cent cost of alternate means of transport. This strategic project will enable the company to source almost 50 per cent of the current requirement of iron ore at Vijayanagar works from outside Karnataka either from imports or from Odisha /eastern sector at prices lower than the prevailing prices in Karnataka. 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. Simultaneously, the company is also exploring the feasibility to set up slurry pipelines for transporting coal from coastal Karnataka to Vijayanagar works.
JSW Steel Ltd has been operating its 12 MnTpa integrated steel plant at Vijayanagar works in Karnataka. The plant has been set up with substantial investments relying upon consistent supply of iron ore at a fair price.
The Supreme Court, in the backdrop of measures undertaken to curb illegal mining in this region, imposed several restrictions which inter-alia includes a cap of mining 30 MnTpa of iron ore within the state of Karnataka. Even after a lapse of over 4 years, the current rate of iron ore production in Karnataka is still around 27 MnTpa, far lower than the demand by the user industries.
The objective of these restrictions imposed by the Supreme Court is to curb illegal mining, facilitate sale of iron ore in a transparent manner and to make available adequate amount of iron ore to the user industry. The apex court has also given a special dispensation to the state owned mining entities viz. National Mining Development Corporation (NMDC) and Mysore Minerals Ltd to produce in excess of their statutorily permitted quantities within the overall ceiling of 30 MnTpa. 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/Chhattisgarh, contrary to the intent of making available legally mined ore at competitive price.
For instance, the price of 63 per cent 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 Karnataka on comparable basis is Rs 3,050 per tonne. In addition to this differential price of Rs 1,475 per tonne, the Karnataka government charges Forest Development Tax at the rate of 12 per cent.
As the availability of iron ore at a fair price within Karnataka is of paramount importance for long term sustainability of the company and environment friendly transportation of iron ore, the board of directors of JSW Steel has given an approval to set up a slurry pipeline to transport iron ore from coastal Karnataka to the Vijayanagar works.
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