India: Odisha promises long term linkage of ore to potential investors

Odisha government will offer iron ore, chrome, bauxite and limestone produced by the state mineral corporation under long-term ore linkage to investors willing to set up end use plants in the metal sector in the state.

Under a new long term linkage policy, the state is extending raw material security to investors in the metal sector willing to make significant investments in greenfield or brownfield capacity in the state, and whose proposals have been approved by the State Level Single Window Clearance Authority (SLSWCA) or the High Level Clearance Authority (HLCA).

The policy also covers plants already operating in the state intending to make substantial investment in mechanised ore evacuation system from Odisha Mining Corporation (OMC) mine.

An Allotment Committee constituted under the new policy will decide who is to be offered a raw material security. Headed by Secretary, Steel & Mines Department, it will have as members, the Secretary Industries, Director of Mines, MD of IPICOL and MD of OMC as it members.

These officers will determine the allotment criteria, final allocation quantity and tenure, which category of end user to prioritise and other terms and conditions. Odisha produces 55% of the country's iron ore and all of its chrome ore. Small and medium players without captive mines count on OMC for ore. Up to 80% of its saleable stock of iron ore, chromite and bauxite is offered under LTL linkage, remaining is auctioned.

The corporation's role is today even more critical after several of the merchant iron ore mines auctioned in the state were acquired by chrome and steel makers, leading to a substantial quantity of ore now used for captive consumption resulting in shortage of raw material in the merchant market.

"The assured availability of raw materials particularly iron ore, chromite ore, bauxite ore and other minerals has become a matter of great importance for the growth of metals industries (primarily steel, stainless steel, aluminium) in the state. Also, in order to provide the impetus for conversion of primary metals to downstream finished products, it has become even more critical now to ensure raw material security to important metals downstream and ancillary units," says the 21 June 2023 dated notification.

Under the new policy:

• OMC retains its right to dispose of, including through exports (directly or canalising agencies), any material that is left after it has served its long term and annual buyers and e-auction bidders, at a price set by the corporation.
  
  
• State -based end-user plants, who already have long-term linkage, are allowed to participate in OMC's national e-auction.
  
  
• While traders will be discouraged, OMC will consider their participation in its auctions if there is persistent lack of adequate response from end-users.
  
  
• Buyers with mechanised evacuation system in operation from different mines of OMC shall be given preference over other long term linkage buyers for offtake.
  
  

The new five year policy, with provisions for annual review, puts an added pressure on OMC to enhance its production. The notification says OMC aspires to achieve 50 mnt production by the close of FY 2024-25 from the current 33.6 mnt ( FY 2023) The government expects its new LTL policy to facilitate smooth dispatch of "such a large quantity of minerals with the objective of meeting the raw material demand of several industries."