Will NMDC dump inferior iron ore at ailing RINL?

Visakhapatnam Central public sector mining major NMDC, which has long-term agreement with Rashtriya Ispat Nigam Ltd (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), has expressed its desire to supply iron ore from Karnataka instead of Kirandul and Bacheli mines in Chhattisgarh causing severe discontentment among the employees.

Iron ore is the main raw material for steel production. RINL has a long-term agreement for supply of iron ore from NMDC. Incidentally, both the central public sector entreprises (CPSEs) are under the control of the Ministry of Steel. Even as the issue is straining the relationship between the two CPSEs, NMDC is also holding talks with RINL to get 1,400 acres on a long-term lease to set up a pellet plant and develop a stockyard as part of land monetisation plan of Visakhapatnam-headquartered company.

Reliable sources told Bizz Buzz that NMDC officials informed their counterparts in RINL that due to a shortfall in production in mines located in Chhattisgarh, they will supply iron ore from Karnataka. This if materialises may entail huge burden on cash-strapped VSP. Moreover, the quality of iron ore available in Karnataka is said to be inferior compared to that of raw material supplied from Chattisgarh.

“We fear that denial of qualitatively rich iron ore from Chhattisgarh is a ploy to worsen the financial crisis faced by RINL further. The move will certainly be costly and affect our quality of production,” J Ayodharam, convener of Visakha Ukku Parirakshana Porata Samiti (VUPPC), told Bizz Buzz.

He said despite the financial woes, RINL has cleared most part of Rs2,000crore of dues to NMDC. In fact, NMDC has been benefited a lot by VSP due to procurement of iron ore from RINL when the mining corporation was a non-entity.

He also blamed the authorities for not supplying rakes as per demand to RINL and found fault with the Adani Gangavaram Port for not allowing unloading of coal brought by them from Australia and other countries under the plea of non-payment of dues.

Meanwhile, social activist and former IAS officer EAS Sarma in a letter to Union Steel Secretary Nagendra Nath Sinha regretted the decision of NMDC and asked the Ministry of Steel and Department of Investment and Public Asset Management (DIPAM) to treat the CPSEs in a fair manner, ensuring that DIPAM’s disinvestment policy does not imply undue benefits to private companies.

He said NMDC earlier supplied iron ore from Chhattisgarh mines in Kirandul and Bacheli and has since asked VSP to procure ore from NMDC’s mines in Karnataka, imposing an additional cost of Rs1500 per metric tonne. Apparently, NMDC is diverting ore from Kirandul and Bacheli to private steel companies such as ArcelorMittal Nippon Steel, JSW Steel and JSPL, he pointed out.

The activist said in addition to the additional cost burden, iron ore supplies to VSP from Karnataka will involve logistic problems with the Railways, which the Ministry of Steel has not been able to resolve in similar cases.

“This is a typical case of one CPSE letting down another CPSE, involving benefits being passed to a few private companies at the cost of the CPSE. I do not see any reason why NMDC cannot supply ore from the Kirandul/ Bacheli mines to VSP at a market-discovered price to enable the latter to function without incurring losses,” remarked Ayodharam.

According to Sarma, the Ministry of Steel can’t say that NMDC is an independent CPSE and it has no role in its management, as two of the ministry’s senior officers are a part of NMDC’s board. Moreover, the Department of Public Enterprise’s disinvestment policy guidelines of December 13, 2023, have taken away whatever little autonomy that NMDC has.

On the basis of the previous track record of CPSE disinvestment, in which the sale of two valuable CPSEs, CEL and Pawanhans had to be aborted in the last minute as both turned out to involve highly suspect deals, one can’t, but infer that the way the central ministries have so far dealt with the case of VSP raises similar apprehensions about their intentions, 0the former bureaucrat stated.