Odisha needs tactical initiatives to meet steel output target

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Odisha needs tactical initiatives to meet steel output target

Saturday, 13 March 2021 | JYOTI PRAKASH MOHAPATRA

Joining the Union Government’s mission for 300 MT steel in the country, the Odisha Government has set a target of production of 100 MT steel in the State by 2030. The Odisha Economic Survey 2021 Report says the total installed capacity of steel plants in Odisha is 32.82 MTPA.

Considering the availability of iron ore, coal and various other natural advantages along with the existing band of large investors in the steel sector, this target seems to be realistic and very strategic in strengthening the industry and economy of the State. However, the State Government needs to take various tactical initiatives to make Odisha attractive for investors, existing and new. Iron ore and coking coal is the key raw material for steel production. Odisha has 33 per cent of India's iron ore as of 2019. 

About half of India’s iron ore is produced in our State.  However, unfortunately, many of the steel plants in Odisha are struggling to meet their iron ore requirement at a competitive price.

After the Mineral (Auction) Rules, 2015, the iron ore blocks are allocated based on auction by the State Government. From the past auctions, it is found that there is no preference for the existing steel producers of the State. Big companies having steel making facilities outside the State are taking advantages of this and Odisha’s iron ore is moving out of Odisha without any value addition. 

Though the State earns the royalty and other payables in mining, without value addition the state fails to maximise the earning from its mineral reserves.

To attract more existing and new investors in the steel sector, the Odisha Government needs to make a preferential auction for the allocation of iron ore blocks to the State-based value addition industries.

 A part of the mineral produced in the State by merchant miners, including Odisha Mining Corporation, can also be reserved for the State based steel industries so that more investors take interest in Odisha. Otherwise, investors without assurance for raw material will lose interest in the State like POSCO. Reserving a part of the mineral reserve will also act as an incentive for the investors to invest in the State.

 Though Odisha has 24 per cent of the coal reserve in the country, the availability of coking coal is not adequate. Therefore, most of the steel producers in the State depend upon import.

The State Government can reduce the dependency upon import of coking coal by promoting steel making through coal gasification technology. The Odisha Government, to make the 100 MT steel production target more achievable, also should encourage brownfield expansion of existing steel projects and plants. Some of the big companies like ArcelorMittal, SAIL, Jindal Steel and Power, Tata Steel have already announced or started work for the expansion of their existing steel plants. 

ArcelorMittal has already announced an investment of Rs 2,000 crore for the expansion of its pellet plant at Paradip. Recently, the company has signed an MoU with the Odisha Government to set up a mega steel plant in Kendrapara district with an investment of Rs 50,000 crore.

SAIL, in its vision 2030 programme, plans to increase the capacity of the Rourkela Steel Plant to 8.8 MTPA.  Recently, the high-level clearance authority (HLCA) of the Odisha Government has approved the proposal of expansion of JSPL’s Angul steel plant to 18.6 MTPA. 

Similarly, the Government has approved the expansion of Yazdani Steel and Power’s expansion proposal increasing the capacity of its integrated steel plant at Kalinganagar from the existing 0.07 MTPA to 1.19 MTPA.

Naveen Jindal, Chairperson of Jindal Steel & Power (JSPL) which has already set up Odisha’s largest steel plant of 6 MTPA capacity at Angul has recently announced the Company’s Vision 2030 for Odisha. As per this, the company plans to expand its capacity to 25.2 MTPA and set up world’s largest steel plant. Brownfield expansions require less land acquisition for the project as well as for developing associated infrastructure like road, railway lines, water supply lines etc. Existing facilities of industries can be used optimally with brownfield expansions.

The Government should incentivise this by providing exemptions in taxes and various duties. This will also encourage existing investors to invest more in the state so that the goal of 100 MT steel becomes more realisable.  

Encouraging the existing investors for brownfield expansion would also be relatively easier for the State Government because of the familiarity with each other. However, Odisha needs to move one step ahead in capitalising on the growing steel demand and its available iron ore reserve.

The Government need to give preference to brownfield projects and facilitate a speedy approval process.  An assurance of secure raw material supply at a competitive price either through a preferential auction or through Odisha Mining Corporation would be an advantage. Else other States would be producing more steel with iron ore from Odisha.

(The writer is Assistant Professor, Indian Institute of Mass Communication, Dhenkanal)

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