Tata Steel expects its profits to come under pressure in the December quarter due to acute shortage of iron ore leading to lower production.

In the current quarter, mining operations at Noamundi Iron Ore mine in Jharkhand have been suspended for the entire period and mines in Odisha, including Joda Iron Ore mine, have been suspended for more than a month, said the company in a statement.

The development resulted in the company curtail production by suspending operations at one of its blast furnaces. Besides procuring iron ore from the domestic market, the company had to rely on imports despite severe logistic challenges at the port and availability of railway capacity.

“All these factors impacted the stability of operations, cost structure and the profitability of the company during the quarter,” said Tata Steel.

Jharkhand mining

In response to the company’s petition filed in the Jharkhand High Court, the State Government said the Cabinet has conditionally approved the renewal of mining lease to Tata Steel.

Following this, the Jharkhand High Court directed the State Government to grant permission to the company for mining by December 18. The matter is currently pending with the State.

In a separate development, the steelmaker has approached the High Court on the legality of some of the terms and conditions put forth by the State Government.

Tata Steel is ramping up steel production following the resumption of iron ore and manganese mining in Odisha on December 15.

The company restarted iron ore and manganese mining at four different locations in Odisha after a gap of one month following an interim order issued by the High Court on December 3.

The company expects the Odisha Government to renew its licence for mining at Khondbond iron ore and three manganese mines by mid-February based on the direction given by the Supreme Court. The mining operations at these places remain suspended since May, it said.

On Tuesday, the company’s scrip closed 1.94 per cent lower at ₹396.45 on the BSE.

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