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New coal policy poses threat to steel sector in Odisha

Steel industry in Odisha continues to lurch from one crisis to another. While it has been facing an iron ore crisis for past sometime, now it faces a major coal crunch as none of the coal blocks in the state proposed to be auctioned by the Centre are reserved exclusively for steel makers.

According to the notification by coal ministry, out of the 101 coal blocks identified by ministry for auction, 18 are in Odisha.
 
 Of these 17 are reserved for allotment to power sector companies and one block has been earmarked for non-regulated sectors of steel, cement and captive power.

Major investors in steel sector in the state including Jindal Steel & Power (JSPL), Bhushan Steel, Jindal Stainless and Visa steel, which have invested heavily on the basis of the coal blocks allocated earlier have now lost the opportunity of bidding for their respective coal blocks.

The Utkal B-1 coal block, allocated to JSPL prior to the Supreme Court Judgment, has been assigned to the power sector.

With this the JSPL, which is building a 6 MTPA mega steel project won't be able to bid for Utkal B-1 coal block.

Similarly, the Radhikapur (W) coal block, earlier allocated to Tata Sponge, SCAW Industries and SPS Sponge Iron is listed under 'power' in the list issued by the coal ministry.

Similar is the fate of Bijahan Coal Block, allocated earlier to Bhushan and Radhikapur (E) block, earlier given to Rungta Mines, OCL India and Ocean Ispat.

Only Jamkhani coal block, earlier allocated to Bhushan, is reserved for nonregulated sectors that include steel and cement industries. Dulanga, Manoharpur, Dipside Manoharpur, Mahandi, Machhakata, Utkal-E, Utkal -D, Chendipada and Chendipada - II coal blocks are reserved for government owned companies.

After iron ore, coal is the most important raw material for steel production. Without captive coal blocks steel companies will struggle to feed their captive power plants and steel plants.

Source: Business Today