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JSW seeks West Bengal Govt help to Secure Iron Ore Supply
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KOLKATA: Curbs on mining iron ore in Odisha and its movement between states have stymied JSW Steel's proposed Rs 35,000-crore steel project in West Bengal, forcing its chairman to seek the intervention of chief minister Mamata Banerjee.

Sajjan Jindal's steel-cum-power project at Salboni has been granted land and coal linkage, but a near-ban on iron ore mining in neighbouring Odisha, from where it was to source ore, is threatening to derail it and has lead to riskaverse bankers stiffening their stance that ore supply should be secure.

The project is already four years behind schedule. A troubled Jindal, whose Karnataka steel plant, too, is facing problems because of a similar mining ban in the state, has now urged Banerjee for a more convenient ore transportation policy.

"I have requested Banerjee to look into the issue of inter-state transfer of ore. We want market-linked access and the CM has promised to take it up with the Centre," Jindal told ET recently. The country's second-largest steelmaker was to source iron ore from private miners in Odisha, but plans went awry when the Naveen Patnaik government clamped down on mining after irregularities came to the fore.

The state is home to a large number of family-run mining companies that have been pulled up by a Centreappointed panel for lax rules on corporate governance. Ore linkage is also vital for the project's financial closure.

The company is to get more than.`

10,000 crore from a consortium of 23 banks, which is insisting on concrete ore supplies. JSW, which is planning to invest Rs 20,000 crore to build the 3-million tonne steel project and a 300-mw power plant at Salboni, will require about 8 million tonnes of the ore in the first phase.

The steelmaker's woes have been compounded by the absence of regulation to allow steel projects to access ore from other states. Unlike coal, the other essential material for steel-making, India does not have a policy on iron ore.

Most projects are dependant on approvals from state governments, which typically cite value-addition clauses to deny resources to projects based outside the state. Odisha, which at 70 million tonnes is the largest producer of iron ore in the country, has almost banned mining of the ore.

The state's iron ore mining industry witnessed strict government action following reports that norms were being violated to facilitate exports. The drive against erring miners was spearheaded by the chief minister, who has suggested a special tax to regulate "abnormal" profits.

"JSW does not want to burn its fingers again," said Jagdish Agarwal, a research analyst with Emkay Securities. "After spending close to two decades operating its steel plant at Vijaynagar without captive ore, the group is insisting on a mine linkage before starting work."


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