‘India needs to fix the iron ore pricing mechanism’
Early 2020, Arcelormittal India won the Thakurani iron ore mine in Odisha by agreeing to pay a 107.55 per cent premium. The mine was to meet the requirements of Arcelormittal Nippon Steel India (AM/NS India). But as it charts out major expansion plans,
DILIP OOMMEN, chief executive officer of AM/NS India, tells Ishita Ayan Dutt that for future raw material securitisation, it will only go with fair premiums. Edited excerpts:
AM/NS India has laid out a plan of increasing steelmaking capacity to 30 million tonnes (mt). What is the timeline for achieving the target?
The groundbreaking for downstream has been done and for Phase I, which will take the capacity to 14.5 mt, is expected to happen by December. We will put this on the fast track and subsequently go to 18.5-19 mt at Hazira in the next phase.
Meanwhile, we are looking at Odisha. We want to develop at the existing Paradeep site and also there is an alternative land parcel (Kendrapara) for which we have signed an MOU (memorandum of understanding) with Odisha. Both options are advancing well.
Is Paradeep an alternative to Kendrapara?
It is in addition.
We are looking to set up a steel plant of, maybe, 6 mt capacity at Paradeep. At Kendrapara, we are looking at another 12 mt.
You have been shortlisted for Neelachal Ispat and inorganic opportunities are coming up like RINL and NMDC’S steel plant. Would you be participating?
We are always looking at opportunities that fit in with our strategic plan, whether it is mines or steel plants or ancillary units.
Iron ore mines will come up for auction in Odisha. Would AM/NS India bid?
Certainly, we will participate in the auctions for raw material securitisation of our expansion plans.
Having said that, the country needs to fix the iron ore pricing mechanism.
Iron ore prices in Odisha are just too high and it is certainly not sustainable.
The Indian steel industry is losing its edge because of the iron ore pricing. There are states where lower grade iron ore is priced much higher than the rest of the country.
We need to have a fair pricing mechanism. The National Mineral Index for Steel has to be launched. It is already delayed.
Last time, players, including AM/NS, had bid at a huge premium. Will there be a repeat?
Participants have realised that the existing pricing is too high and not sustainable at all.
Currently, what kind of iron ore security does AM/NS have?
We have two mines. We won Thakurani in the last auction which is operating in full swing. Sagasahi mine is expected to commence operations shortly. But for our future growth, we will require more mines. We will only go with fair premiums.
Just because we want securitisation does not mean we will forget costeffectiveness to remain competitive.
Is there a possibility that you might give up Thakurani and bid at a lower premium for blocks?
We are in full production and will definitely not give up. Once we go ahead with a decision, we stick to it. I can only say the pricing mechanism today is very unfavourable and hurting us. The government needs to have a solution as early as possible.