OMC open to long-term linkage pact with JSW Steel, says official

State-owned Odisha Mining Corporation (OMC) is open to signing a long-term iron ore supply agreement with JSW Steel for the latter’s proposed 10 million tonnes a year steel plant, a senior government official has said.

JSW Steel, in its proposal, has pitched for a 50-year agreement with OMC to supply 30 million tonnes of ore fines in a year, at the Indian Bureau of Mines-declared price. The steel firm has also suggested OMC engage a mine developer-cum-operator on a long-term basis to develop its large mines like Gandhamardhan and Dubuna, in a bid to secure long-term supply for the steel plant.

“We already have a long-term linkage policy. We will be processing the JSW requirement accordingly,” said the official.

Usually, OMC signs long-term linkage pacts with ore-consuming companies for five years. In Odisha, Essar Steel, Visa Steel, Jindal Steel & Power, Bhushan Steel, and MMTC promoted Neelachal Ispat Nigam Ltd are among the firms buying iron ore from OMC through long-term linkage. Tata Steel is also examining the possibility of clinching a long-term pact to secure ore for its Kalinganagar plant. On a trial basis, the steel maker has signed an agreement with OMC which is valid for one year.

OMC produces around six million tonnes of ore annually, and it has plans to ramp up the output to 20 million tonnes over the next three to four years, through increased mechanisation of its key mines. Sajjan Jindal-led JSW Steel has pledged an investment of ~50,000 crore on the Odisha plant and associated facilities. The company has asked for 4,500 acres of land for its integrated steel project to be set up close to Paradip.

Though the state government officially maintains that the site for JSW’s project is not final, the company has asked for the land where the Posco project was supposed to come up. JSW has asked for 2,700 acres that has already been acquired for the Posco project. The company wants this land to be transferred by the government after constructing a boundary wall. Aside from the steel plant, the company has asked for around 150 acres for a township and 90 acres for rehabilitation and resettlement (R&R) colony. It has urged the government to transfer all the land parcels at ~4 lakh an acre.

To optimise raw material costs, JSW Steel has committed an investment of ~3,700 crore on a slurry pipeline for transporting 30 million tonnes of iron ore each year from Joda to Paradip.