JSW Steel Ltd said on Tuesday that it might have to shut down its Vijayanagar Plant in Bellary if the disruption of iron ore supplies continues in Karnataka.

“We are operating at a minimum level of 30 per cent. If the situation continues, we may have to shut the plant,” Mr Sajjan Jindal, Vice-Chairman, JSW Steel, said. He was speaking to reporters on the sidelines of the Assocham conference on ‘Technology infusion and sustainability issues' in mining sector.

Supply disruption

JSW Steel operates a 10 million tonnes per annum capacity steel plant at Bellary. In July, the company had commissioned its fourth furnace of 3.2 mtpa. The iron ore supplies to the Vijaynagar plant have been disrupted since July after the Supreme Court imposed a ban on iron ore mining and transportation in Bellary on environmental grounds.

The Court had subsequently directed state-run NMDC to supply one million tonnes of iron ore per month to the industry in the region, which hasn't been fulfilled by the mining giant. The court had also ordered release of 1.5 million tonnes of iron ore from the stockpile through e-auction.

“The industry cannot run on auction-based supply of iron ore. It has to run on continuous and regular supplies. No industry in the world runs on auction-based supplies,” Mr Jindal said.

Shares of JSW Steel ended 1.29 per cent lower on the BSE at Rs 610.50 on Tuesday. The disruption in supplies will force the company to reset its production target for the current fiscal, Mr Jindal said without elaborating.

JSW Steel is currently forced to operate its plant by procuring iron ore from States such as Orissa, Chattisgarh and Jharkhand, which has increased its operational costs.

In the meanwhile, the Steel Secretary, Mr P.K. Misra, said the steel industry in Karnataka has been asked to present facts on the fallout of the mining ban in Bellary over the next few days. “Once we get the facts from the steel industry, we will place it before the Court,” Mr Misra said.

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