Unavailability of Rake Hits Iron Ore Supply from Odisha

Availability of rake for transport of Iron Ore from the resource rich state of Odisha has declined considerably over the last two months, severely hitting supplies of the key steel making raw material. Transport of Iron Ore through rake has declined from 1142 in August to 936 in September recording a decline of more than 18%.

The rake movement has further declined to 919 in October. This has led to severe disruption of supply to states including Chhattisgarh, Jharkhand and West Bengal which collectively account for about 60% consumption of Iron Ore mined from Odisha. According to traders based in Odisha the domestic demand for high grade Iron Ore fines has improved in the recent few months owing to strong procurement from pellet producers and high realization of pellets in the International market. However the low rake availability has hindered supply drastically. Dispatches from several large mines including KJS Ahluwalia mines and others are slow.

It may be noted here that Railways is the most significant mode of transport for Iron Ore from Odisha and it accounts for more than 75% of the movement of iron ore baring Steel Authority of India and Tata Steel. Transport through road accounts for hardly 20 to 25% of total Iron Ore movement.

Iron Ore dumped at a siding in Joda mining area

According to miners the diversion of rake for transport of Coal to thermal power plants is one of the key reasons behind the decline in rake availability of Iron Ore. Coal transport had been reduced during the monsoon and therefore resulting in depleted stocks with thermal power plants. Local traders believe this to be the key reason behind the Railway’s giving preference to coal since the last two months. If sources are to be believed these conditions are likely to persist during atleast for the next two months if the Railway authorities do not intervene.

Source: SteelMint Research