India: Vizag Steel Running on Low Iron Ore Inventories
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Rashtriya Ispat Nigam Limited (Vizag Steel) is heavily dependent on Kottavalasa-Kirandul (K-K) railway line for iron ore movement from NMDC's Bailadila mines in Chhattisgarh to Andhra Pradesh.
After the K-K railway line was damaged in the rains in October'17, Vizag Steel has been facing difficulty in sourcing iron ore from NMDC's mines. This has resulted in extreme pressure on RINL's steel production capacity.
RINL (Vizag Steel), is suffering from scarcity of iron ore. This incident is affecting the buffer stock of iron ore with the steel mill. The mill which once used to stock raw material enough for atleast 40 days is under extreme pressure due to raw material shortage and is left with stocks not enough for more than a week.
According to rake movement data maintained with SteelMint, RINL sourcing decreased by 18% M-o-M to 79 rakes of iron ore in Oct'17 against 96 rakes in Sept'17. So far in Nov'17 (till 21 Nov'17) the steel maker has procured 63 rakes from NMDC (C.G.).
As per sources it will take almost a month's time for K-K line to resume operations in full fledged manner. Owing to this, the Rayagada-Vizianagaram route is the only available option for RINL to procure material from Bailadila mines, but heavy congestion remains a matter of concern. As a result of which, the steel maker is able to source only 3-4 rakes which was earlier 5-10 rakes in case of sourcing from K-K line.
As per sources, Vizag Steel participated in recent OMC iron ore e-auction conducted on 7 Nov'17 and had bid for nearly 80,000 MT iron ore fines from its Daitari Mines, to deal with material shortage crises.
As per few reports, the steel maker is making alternative arrangements to increase stock position by sourcing raw material from Odisha Minerals Development Corporation and Donimalai mines in Karnataka.
RINL is undergoing expansion for doubling its steel capacity from 3 MnT pa to 6.3 MnT pa. Hence after capacity ramp up, the steel maker will be in need of around 11 MnT iron ore.
