Indian steelmaker Jindal Steel continues to see a shortage of iron ore affect its operations and profitability. Operations of Jindal's main iron ore supplier SMPL remain suspended in Orissa state, forcing it to buy iron ore from other sources and increasing its production costs.
SMPL's Thakurani mine was suspended in April last year as its environmental clearances expired. A total of 18 of the 52 operational mines in Orissa have suspended operations since May last year because they were running without valid leases. The Orissa state government is considering the option of auctioning mining leases, although no final decision has been taken yet.
SMPL supplied iron ore to JSPL's 9mn t/yr pellet plant in Orissa's Barbil, while supplying lump to Jindal's 3mn t/yr steel plant in Raigarh in the neighbouring state of Chhattisgarh.
Jindal started operations of its 2.3mn t/yr billet plant in Orissa's Angul during the October-December quarter, but sluggish demand for plates and semi-finished products has prevented the plant from achieving full capacity utilisation.
Jindal, like its fellow Indian steelmakers, has complained to the federal government that cheaper import of steel products from China has pushed Indian steel prices lower, eroding profit margins. It predicts the government to raise import duties on steel products in the federal budget to be presented in parliament on 28 February.
Jindal is forecasting a 2.5pc growth from a year earlier in Indian steel demand and production for the January-March quarter. Steel demand in India grew just over 1pc in the first nine months of the 2014-15 fiscal year ending 31 March.
Jindal's steel business posted a loss of 760mn rupees ($12.3mn) during April-December compared with a profit of Rs8.61bn a year earlier. Sales fell 3pc to Rs100.62bn over the same period.
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