RINL diversifies sourcing for raw material security

04-December-2018

State-run Rashtriya Ispat Nigam Ltd (RINL) , which has been facing problems of sourcing iron ore, from NMDC has started sourcing its raw material from diversified sources so that its output doesn’t get hampered for want of iron ore, which happened in the recent past.

PK Rath, chairman and managing director, RINL, said, “We had been fully depending on NMDC for the supply of main raw material and iron ore. But now, we are sourcing 33% of our iron ore requirement from non-NMDC sources to ensure raw material security.”

RINL requires 6 lakh tonne of iron ore every month. While it is sourcing a part of its requirement from Orissa Mineral Corporation (OMC), a part is being sourced from Karnataka’s Donimalai and Kumaraswamy mines. RINL is also sourcing iron ore from private importers, which are bringing iron ore to India via the sea route. The firm has also started sourcing iron ore from the mines of Vedanta, besides continuing with NMDC as well.

“We need to maintain iron ore stock of 45 days to ensure our raw material security,” Rath said on the sidelines of a conference on steel sector’s growth and survival. While sourcing from diverse mines impact the input cost, raw material security is of paramount interest. During July-August, when RINL was sourcing only from NMDC, they could get only 50% of their linkage quantity. But, sourcing from other mines cost Rs 400-500 more per tonne, mostly on the account of logistics. However, OMC costs less than sourcing from Karnataka, Vedanta and other foreign mines but there are no rakes available to bring iron ore from Orissa.

While RINL has targeted to produce six million tonne (MT) of steel, of which 5.4 MT would be liquid steel this year, for the next year it has aimed 7 MT of liquid steel, Rath said, adding RINL has declared itself as a 7.3-MT capacity unit.

It aims to take the unit to a capacity of 11-12 MT per annum in the next phase of expansion, although nothing has been planned so far.

The plant for securing coking coal has decided to participate in the government auction of coking coal blocks, although the main chunk — around 90% of the coking coal requirement is being sourced from Australia and some from the ICVL mine at Mozambique, where RINL has 25% share.

RINL requires around 45 lakh tonne of coking coal per annum to fuel its coke oven, while 27 lakh tonne of thermal coal is required per annum to run its captive power plant.

While the company to a great extend has addressed the problems of raw material security, it is at an initial stage of talks with Hyundai and POSCO for the next phase of expansion. The next phase of expansion is likely to be a joint venture for making automobile grade long products and this could be taken forward only if the government gives a green signal.

Both POSCO and Hyundai had visited the RINL facility and nothing more had moved beyond that so far, Rath said. RINL has 20,000 acres, of which 3,000 acres is surplus at present.

Source: FINANCIAL EXPRESS