Tata Steel has shut down its Noamundi mine in Jharkhand on the orders from the state government, sources told CNBC-TV18. The decision may come as a major blow to the company as the mine contributed over 30 percent of its iron ore requirements.
The Jharkhand government order follows the Centre’s July 18 directive asking states to clamp down on mines operating under second or third deemed renewals.
The decision is likely to hit 12 out of the state’s 17 operational iron ore mines, including those of SAIL , said media reports.
Tata Steel has been looking at 14-15 million tones of iron ore to meet its steel requirement. From Noamundi itself, the company gets close to about 5 million tonnes, and was looking to further its supply from this mine, which was shut over the weekend. Thus, the company will now have to rely on the inventory or may have to source some from Odisha, which may come at a higher price.
Reacting to the development, Giriraj Daga, Analyst at Nirmal Bang, said that there is no doubt that the mine is big for Tata Steel, with contributing over 30 percent of iron ore, but is hopeful that the matter may get resolved in the next 20-30 days.
“At this point we are not making any cut in the numbers, but would like to see how things pan out. Meanwhile the company can continue to work from its Odisha plant or the current inventory,” he said, adding that if the impasse continues for over a month or so then they may revise the numbers.
Source: Money control
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