BL reported that JSW Steel has cut production at its Vijaynagar plant, which has a production capacity of over 10 million tonnes per annum, to 30% of original levels on the back of a stoppage of iron ore supply.

The company said in a statement that "The abrupt disruption of supplies to JSW Steel by National Mineral Development Corporation cut the lifeline to run the furnaces in safe condition. The Honourable Apex Court's directive to supply 1 million tonne per month to steel industry by NMDC even after a lapse of 50 days is yet to be fulfilled."

JSW Steel said that "This measure has not given any relief as 31% of the total auctioned material was not bought by any of the participants in the e auction due to improper pricing for low grade ore. Further, out of the balance 69%, only 10% was dispatched to the industry till date due to several procedural delays."

It added that the artificial scarcity of material may lead prices of raw material increasing to unnatural levels and that continuing steel production even at current levels would be very challenging.

The company's move comes after the Supreme Court in July directed that all mining in Bellary, Karnataka be stopped on allegations of rampant illegal mining in the region. In August 2011, however, the apex court ordered state owned miner NMDC to release 1 million tonnes per month of iron ore to cover the raw material crunch faced by the steel makers. A further release of 1.5 million tonnes per month of ore by e auction through a Monitoring Committee was also sanctioned vide a court order dated September 2nd 2011.

(Sourced from www.thehindubusinessline.com)