Steel units want lifting of embargo on day movement of iron ore

19 December 2016

Fighting steep rates for mineral transport in Odisha, one of the highest in the country, steel units have called for lifting the embargo on the daytime movement of iron ore. Allowing unrestricted mineral freight movement will help ease raw material prices for the end-use industries, they pointed out.

Apart from steel and other mineral based industries who have to fork out higher prices for ore, the state government is also losing a sizeable chunk of revenue. The embargo in day movement of ore in mineral-rich districts of Keonjhar, Sundargarh and Angul is already showing up in the shortfall in revenue collection, especially in the mining sector.

Steel and other end-use industries have already appealed to the state government to take a call on withdrawing the embargo on day movement of ore. A decision, however, is still pending.

“The decision to lift the embargo on day movement has to be taken at the district level. The respective district collectors can take a call after factoring in law and order issues and available infrastructure to sustain the mineral freight load”, said a government official.

The state government has already notified a uniform freight policy for mineral transport, fixing a ceiling on maximum permissible transportation charges. But, local transporters have rallied to violate the government notification. Besides, the restriction on movement has offered scope to transporters to collect more. The mineral transportation rate is 40-55 per cent higher than the government notified ceiling due to a ban on daytime movement.

“The uniform freight policy as announced by the state government is yet to be implemented on the ground. Transporters are charging huge prices for mineral movement in the night. Freight rate by road is now 40 per cent of the ex-mine price of iron ore and this is seriously affecting the end-use industries who are battling for survival”, said a senior executive with a steel company.

The local administration has imposed the restriction, which is also helping the transporters. Taking advantage of this daytime embargo on mineral transportation, the local transporters are charging exorbitant price from mining lease holders and end user industries for transportation of mineral in the night. There are instances where transport agencies have been found to be engaged in restrictive and obstructive activities in mineral transportation in Joda and Koira sectors.

Pursuhottam Kandoi, president, All Odisha Steel Federation said, “The industries are already facing a slew of restrictions. There should not be any curb on the movement of minerals. Daytime embargo needs to be lifted in the interest of the end user industries. This will help cut prices of raw material reaching the plants.”

In the case of one-way transportation of iron ore in Joda for up to 28 km, the highest producing circle, the maximum freight rate notified by the government is Rs 184 per tonne. But, transporters were charging Rs 325 per tonne, about 40 per cent higher.

Similarly, for 40 km one-way distance, the freight rate charged by transporters is almost double the amount as per the government notification. The transports charge Rs 495 per tonne, but the maximum rate for a 10-wheeler vehicle, as per government notification it is Rs 224.

Source – BS