India: Acute shortage of iron ore rakes hampers steel plants' operations in Odisha

Mills in Eastern India are grappling with a severe shortage of stocks, and a resolution seems contingent on assistance from Indian Railways.

In a letter addressed to the Railway Board in late December, JSW Steel highlighted the critical constraint in rakes at the Chakradharpur (CKP) division, attributing it to the surge in exports and the Railways' inability to provide sufficient rakes for domestic consumption. JSW Steel, with the majority of its mines in Odisha and Karnataka, along with plants at Dolvi, Vijaynagar, and Salem, stated that, against the requirement of 12 rakes a day at CKP, it receives only 5 rakes.

The Railway gives priority to domestic consumption over exports, restricting each exporter to three rake indents per siding. However, the letter asserts that privately-owned rakes under the General-Purpose Wagon Investment Scheme (GPWIS) receive first priority. These private rakes, which have dominated loading and routes since the surge in iron ore prices since May 2023, also benefit from a standard freight rebate of 10% and are available for hire to others.

As per the latest data from SteelMint, India's exports of iron ore and pellets surged to a three-year high, surpassing 44 million tonnes (mnt). Out of this total, around 33 mnt comprised mostly low-grade iron ore, as the export tariff on iron ore above 58% stands at 30%. Approximately 11 mnt of pellets were exported in the previous year.

"Due to the non-availability of Indian Railway (IR) rakes, GPWIS operators are asking for very high margin in addition to 10% rebates by IR as per policy. Perhaps this aspect of profiteering was not envisaged by the Railway Board while formulating the (GPWIS) Policy," claims JSW Steel.

The steelmaker's privately owned General-Purpose Wagon Investment Scheme (GPIWS) rakes are currently utilized to transport materials purchased from Bailadila mines. The company asserts that this method is more cost-effective than transporting ore from its own mines in Odisha by road. A company official explained that, considering the plan to lay a slurry pipeline from its mines to the proposed plant in Jagatsinghpur, the company had acquired a limited number of rakes.

As per the letter, the overall loading from the Chakradharpur (CKP) division has declined compared to the previous year due to these issues. The loading has continuously decreased since November 2022, despite an increase in steel production.

The letter also claims that the GPIWS rakes, instead of operating primarily from private sidings and terminals, operate from Indian Railway goods sheds. "It is a fact that popular goods sheds like JRLI (Jaroli), BSPX (Banspani) on CKP division and DATR, NYG, PRNR on Khurda divisions have been captured by GPWIS rakes (which have 24 hours stacking permission)."

"Iron ore deliveries via rake movement have turned slow in eastern India which has resulted in some miners putting offers on hold", quoted a trader.

It requests the Indian Railways to:

• Maintain adequate supply of RI BOX rakes to CKP division to keep the plants running.
  
  
• Review RAS in order to give desired parity for loading iron ores to domestic steel plants vs export and pellets as per policy.
  
  
• Also, consider the priority to domestic over export when allocating indents to GPWIS and Premium indents. These allotments may also be brought under cluster system, loading capacity and unloading capacity consideration to avoid blockage of public goods sheds by GPWIS.
  
  
• look into GPWIS rakes being used from popular goods sheds.