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By Bizodisha Bureau, Bhubaneswar, May 16, 2017 : Sajjan Jindal-led JSW Steel has began discussion with Odisha government for a long-term iron ore linkage arrangement with Odisha government-owned Odisha Mining Corporation (OMC) to feed its proposed 10-million-tonne mega steel plant, officials said here.

The Company needs 16 million tonnes of iron ore annually to feed the steel plant. “JSW Steel wants to secure long-term iron ore supplies for its proposed steel project in Odisha. The company has discussed this with the state government, though there is no definitive proposal yet”, said a senior government official who did not want to be named.

OMC presently provides iron ore to several steel units running in Odisha without captive mines. The ore is offered through electronic auctions that are normally conducted every other month. A steel industry or any other end-use plant can source iron ore either through pre-emption or long-term linkage. Under pre-emption, the Odisha government has a policy to reserve at least 50 per cent of the iron ore produced by merchant miners for state-based end-use plants.

In Odisha, Essar Steel, Visa Steel, Jindal Steel & Power Ltd (JSPL), Bhushan Steel Ltd and MMTC-promoted Neelachal Ispat Nigam Ltd (NINL) are among the steel units that buy iron ore from OMC through long-term linkage. For JSW Steel, having a long-term linkage arrangement with OMC makes sense as the state-run miner has been mulling a cut in the floor price of ore offered through this route.

Steel and other end-use industries were already pressing for a discount of 20 per cent on the iron ore they buy from OMC via long-term linkage. Even Tata Steel is examining the possibility of clinching a long-term pact with OMC to secure iron ore for its Kalinganagar plant.

The company has proposed to put up the steel plan at an investment of Rs 50,000 crore on the steel mill and an additional Rs 3,500 crore on associated infrastructure such as coal and iron ore berths and a slurry pipeline.