The Steel Authority of India Limited (SAIIL) is supposed to experience the disruption after March next year. The mining lease for two key raw materials – coal and iron ore – is going to expire by March next year.
Speaking at a session on ‘India: Roadmap To A USD 5 Trillion Economy’ organised by FICCI, SAIL Chairman Anil Kumar Chaudhary expressed his concerns about the auction route that creates much hassle to get the mining lease and rising input cost of raw materials on Saturday.
‘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 April 1, 2020, because of the auctions of coal mines,’ said SAIL Chairman.
The new amended Mines and Minerals (Development and Regulation) Act has the provision for the allotment of mines through fresh auctions only. The licences can’t be renewed under this act.
He underlined in the session that the production cost of steel in India is the highest. One of the major factors responsible for higher input cost is the taxation process. He said, ‘In India, the average production cost of per tonne steel is about $450, whereas in China it is as low as $350 where players get the benefit of low tax and incentives’.
Stressing on higher input cost that SAIL bears, he said that royalty is close to 20 per cent on the both – coal and iron ore. Apart from freight cost which is higher than in other countries, electricity also adds to the high production cost.
He pointed out “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’.
To meet the National Steel Policy target of 300 MT steel production, he said, these challenges of steel industry needs to be addressed.