Steel ministry to help industry tackle slump

Steel ministry to help industry tackle slump

New Delhi: The steel ministry has in principle agreed to the demands made by the industry to help it tackle the downward slump in demand, triggered by the worldwide financial crisis.

The ministry will shortly forward a note to the finance ministry seeking a combination of provisions that may include duty imposition on steel products to check cheaper imports and reduction in export duty among others. In return, the industry has promised not to increase prices from the current levels.

However, analysts say with the demand slowing down worldwide, it will automatically bring down prices.

“The worldwide recession would impact the greenfield expansion plans of the Indian steel companies as raising finances is a big issue," Ram Vilas Paswan, union minister for steel, chemicals and fertilizers briefed reporters after a meeting with the representatives of the steel industry such as Naveen Jindal, executive vice chairman and managing director, Jindal Steel and Power Ltd, Sajjan Jindal, vice chairman and managing director JSW Steel, Sushil Kumar Roongta, chairman, Steel Authority of India Ltd, B Muthuraman, managing director, Tata Steel and Prashant Ruia, managing director, Essar Steel Limited among others.

“It is for the finance ministry to decide on the measures. If we had not found merit in the steel industry’s proposal, we would not have called the meeting. The raw material prices have substantially increased. For example, the coking coal prices have increased three times from $100 per tonne from last year. The problem has reached a point when the industry will face problems in surviving," Paswan added.

Expressing the steel industry’s fears Muthuraman added, “There is a problem in raising finances." Tata Steel is the largest private sector domestic steelmaker.

In a related development the steel ministry also wants to form a special purpose vehicle and invite private sector participation for the Jharia coal mines to tackle the problem of underground fire and tap 17 billion tones of coal reserves.

“Coal India Ltd does not have the resources to deal with the problem," Paswan said.