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29 Apr 12 Orissa mining to start chrome E auction from Q2

ET reported that beginning second quarter, Odisha’s state owned mining firm will e auction chrome, an ore essential to make stainless steel.

By resorting to auctions, Orissa Mining Corporation is preempting a similar move for iron ore linkages, but more immediately addressing a long pending demand from its suppliers to address the high prices for chrome.

OMC is the primary supplier of chrome ore, which is almost solely mined within Odisha, home to 95 to 98% of the country’s estimated reserves of 66 million tonnes. Only TATA Steel, Balasore Alloys, FACOR and IMFA own chrome mines, leaving OMC as owner of two thirds of the state’s deposits as the monopoly supplier of the raw material.

Ferrochrome producers such as Jindal Stainless, Visa Steel, and Rohit Ferro Tech, who set up capacity in the eastern state on commitment of assured supply, have been forced to shut furnaces claiming OMC ore pricing was unviable. Some such as Nav Bharat Ferro Alloys, Aarti Steel have turned conversion agents for companies such as TATA Steel and others such Jindal Stainless resorted to importing the alloy directly for downstream production, while keeping their own ferrochrome units idle.

Mr Subash Singh Virdi executive director responsible for Jindal Stainless’ Odisha business said that “We have been very badly hit by this, and were forced to shut down our five ferrochrome furnaces for 5 to 6 months last year, and started importing ferrochrome instead from South Africa which turned out to be INR 7,000 to INR 8,000 a tonne cheaper. But it is not very wise particularly in a backward tribal area to keep huge manpower idle for too long.”

Failing to resolve issues, the industry represented by the All Odisha Steel Federation and Kalinga Nagar Industries Association has sought redressal from the High Court at Cuttack, as well as the Competition Commission in the centre.

The differences have been over the pricing modalities adopted by OMC. As a practice, the firm would tender a sample lot, accounting for 2% of its total production, before the start of a quarter. It would then use the highest offer as benchmark, around INR 15,000 to INR 16,000 per tonne last year, for its entire production over the next three months offered to empanelled members.

Source – Economic Times


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