India’s Ministry of Steel has directed government-owned and managed steel and mining companies to have a formalized arrangement for sharing of resources and logistical facilities to achieve cost efficiencies and economies of scale, a senior ministry official said on Thursday, March 2.
The official said that the ministry has noted that the minimum consultation and interface between the top management of government-owned mining and steel companies result in sub-optimal usage of resources and logistics available with these companies.
The ministry directive to pool resources and logistics was issued against the recent stricture to these companies to “perform or perish,” he added.
The official said that pooling of resources would achieve significant economies of scale and cost efficiencies in the case of companies like Indian state-owned miner National Mineral Development Corporation (NMDC) and state-owned steelmaker Steel Authority of India Limited (SAIL).
An apex committee would be set up comprising the chief executive officers of each government company and steel ministry officials to identify specific areas of resource pooling and sharing of logistics, the official said in relation to the question of whether NMDC would share its iron ore with SAIL or whether the latter would engage in the management of NMDC’s under-construction 3 million mt per year steel mill in Chhattsgarh state.
The ministry would also push for common procurement of raw material, equipment, spares and sharing of stockyards and other areas of sharing and pooling among companies to achieve lower costs and bargaining power with suppliers, the official said.
A common marketing platform between steel companies like SAIL and state-owned steelmaker Rashtriya Ispat Nigam Limited (RINL) would also be on the table of the committee for consideration.