Iron Ore Shortage to Impact Profitability: Tata Steel

New Delhi: Tata Steel today said suspension of a blast furnace for over a month at its Jamshedpur facility for want of iron ore impacted production and profitability in the current quarter.

The company has captive sources to run the 9.8 mtpa unit, but the raw material crunch cropped up following suspension of operations in a mine in Jharkhand and four mines in Odisha by respective state governments.

"For the current quarter, mining operations in Noamundi Iron Ore mine in Jharkhand was suspended for the entire period and four mines in Odisha including the Joda iron ore mine was suspended for a month," Tata Steel said in a statement.

This compelled the firm to curtail output by suspending operations at one of its blast furnaces and forced to operate below capacity for more than one month during this quarter.

As local merchant miners also failed to produce because of their suspend operations, Tata Steel resorted to importing the raw material despite facing several logistic challenges.

"All the above factors have impacted the stability of operations, cost structure and profitability of the company during this quarter," Tata Steel said.

The company's mining operations in Odisha, however, have resumed earlier this month and "the steel operations of the company have been ramped up."

"The company continues to be fully engaged with the Government of India and the State Governments of Odisha and Jharkhand to pursue the renewal of the leases of the mines and is also pursuing appropriate legal recourse in the matter," it said.

Tata Steel has been operating its mines in Jharkhand and Odihsa for several decades and the operation of its Jamshedpur facility is dependent "equally" on these mines located in the two mineral-rich eastern states.

The Odisha High Court had on December 3 passed an interim order directing resumption of four iron ore mines and a manganese mine. They have commenced operations since December 15, Tata Steel said.

The company is expecting the Odisha government to take a decision on Khondbond iron ore mine and three manganese mines by the middle of February next year.

The Sukinda Chromite mine in Odisha is expected to resume soon, it said, adding that the processing operations of the ferro alloys division was also likely to resume soon.

Regarding the miner in Jharkhand, the company said it was currently pending with the state government.