Hail SC move; hope category B mines cleared soon: JSW Steel

Rao also hopes that the category 'B' mines are also cleared soon so that it can help to improve supply. He also believes, e-auction prices may fall due to correction in international iron ore prices.

Besides, JSW Steel recently merged with JSW Ispat and Rao emphasised on the fact that he is not worried about leverage on the combined entity post merger.

Here is the edited transcript of the interview on CNBC-TV18.

Q: Yesterday the category A mines were cleared by the Supreme Court. How much of a positive do you see for JSW Steel?

A: It is a welcome step, it is a great news and we have been eagerly waiting for it. Once these 18 mines get operational, it will have a capacity of 7 million tonnes. Out of that, 6 mines will take some time for production. There are also some additional conditions.

If we take into account the remaining mines, it will have a production capacity of close to 5 million tonnes. It will definitely improve the situation in the months to come and also it will pave the way for opening up the remaining category A mines. We are also hopeful that the Supreme Court will take a view and permit mining in the category B mines also in due course of time.

Also read: JSW Steel, JSW Ispat merger ratio at 1:72

Q: By when do you see utilization improving in your Vijaynagar plant and how much will the utilization levels improve now with more availability?

A: Right now we are working at 80% capacity utilization. NMDC has been operating its mines at around 9 million tonnes per annum. Once this 5 million tonnes comes into the market, almost 14 million tonnes of incremental iron ore will be available. In addition to the stocks which are being auctioned, what is already auctioned and not used, those stocks will be taken into account. There will be sufficient stock for sometime but at the same time opening of category B mines is also essential in order to see that the industry would get sufficient iron ore to run their units.

The industry requirement in the state of Karnataka is 30 million tonnes per annum. That is what is approved or what is recommended by the CEC and also ICFRE. Therefore, opening up of the category B mines and normalization will take some more time. Once the situation becomes normal we expect to improve the capacity utilization.

Q: Even if utilization improves, will costs go down or will the increased availability now be funneled through the auction route in which case the prices that you pay will continue to be quite high?

A: Today if we see the auctions, majorly the auction prices are based on the international prices and also the domestic prices. Based on that, it can't be different from the international prices. International prices have come down quite substantially in the last few weeks. We expect the prices to come down even more in the auction going forward.