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Disruption likely in steel industry after March as mine leases expire: SAIL

State-run SAIL on Saturday said the steel industry may face disruption post March 2020 when a number of mining leases expire.

A clutch of mining leases for coal and iron ore are slated to expire by March next year.

According to the amended Mines and Minerals (Development and Regulation) Act, these licences will not be renewed and the mines will be allotted through fresh auctions.

“Today perhaps because of the change in the legislation everything has to go through the auction route, which is creating lots of issues and the steel industry may face disruption by 1.4.2020 because of the auctions of coal mines,” SAIL Chairman Anil Kumar Chaudhary said.

He was speaking at a session on ‘India: Roadmap To A USD 5 Trillion Economy’ organised by industry chamber FICCI here.

Another concern for the industry is high input cost, Chaudhary said.

Today the production cost of steel in India is the highest and one of the major factors contributing to this are the taxes, he said.

Royalty is close to 20 per cent on the input material, whether it is coal or iron ore. Freight cost is higher than what is being paid in other countries. Electricity also adds to the high production cost, Chaudhary said.

“In India, average production cost of per tonne steel is about $450, whereas in China it is as low as $350 where players get benefit of low tax and incentives,” he emphasised.

Coking coal and iron ore are the two key raw materials needed for making steel.

“As far iron ore is concerned, we have it in abundance. The only thing is the judicial allocation has to happen. Coking coal is not available in our country and the whole industry is dependent on import of coking coal, particularly integrated steel sector imports from Australia, Indonesia, the US etc,” he said.

All these challenges need to be addressed for meeting the ambitious 300 MT steel production capacity target set by the government under the National Steel Policy, he added.

Source: Business Standard