Indian domestic steel producers are facing serious logistical challenges in moving towards the doubling of aggregate steel output of 300 million mt per year over the next ten years, Indian Steel Association (ISA), the representative body of Indian steel companies, said in a communication to national transporter Indian Railways (IR) on Tuesday, February 21.
In the communication, the ISA cited data on railway rakes in the eastern region between November 2022 and January 2023 which showed the downward trend in rake allocation by IR for domestic iron ore users, while rake allocation increased in the case of transporting iron ore and pellets for exports.
It stated that, while the indent level for domestic iron ore users at steel mills dropped from 60 percent in November to 48 percent in January, in the case of exports of iron ore and pellets rake indent increased from 57 percent to 74 percent from November to January.
According to the ISA, about 140 million mt of iron ore was transported from the mines of Odisha of which 100 million mt was through IR and 40 million mt by roads. But if Odisha has to double iron ore output to match the targeted 300 million mt of steel production capacity, IR will have to take responsibility to augment its carrying capacity.
The new iron ore policy which governs allocation of railway rakes states that IR needs to strengthen the streamlined full-fledged rake allotment system (RAS) with complete coverage of all iron ore loading locations integrated with the software modules of mining departments of respective states, but this was far for being followed, the ISA said in the communication.
Production of steel has been hit due to the shortage of railway rakes for iron ore transportation and needs to be corrected urgently, it said.