Statement of Steel Plant Employees Union (CITU), RINL
The BJP led central cabinet committee on external affairs (CCEA) had cleared the strategic sale of Rashtriya Ispat Nigam (RINL) on 27 January 2021 and the modalities had been assigned to DIPAM to pave the path for disinvestment. Immediately after the announcement all the Unions of RINL formed the Visakha Ukku Parirakshana Porata Committee, a collective group of 26 unions. They have been organizing the protests since last 1050 days.
The Central Government is intentionally killing this plant by not providing sufficient raw materials in from of captive iron ore mines and railway logistic support. It is important to note that all other existing steel plants in public and private sector have captive iron ore mines and are able to obtain iron ore at Rs 1400 per tonne whereas RINL has to procure iron ore from the open market at Rs 7000 per tonne. Even after repetitive requests made by the unions there hasn’t been any positive front from both ministry of Steel and Ministry of railways.
The present top management’s actions are not in the best interests of running steel plant . During the year 2020-2021 RINL had earned a profit before tax of Rs 914 crores and the same were used to clear the interests and GST bills without purchasing the raw materials or welfare related issues. Their steps seems as if they want to create a crisis. In the recent times they have cleared Rs 1800 crore dues of NMDC, and this led to inadequate fund reserves to procure imported coking coal.
Though there are other alternative ways to overcome working capital crisis, those are not being worked out. Raebareli Forged Wheel Plant sale and monetising lands in HB colony in Vizag and leasing lands to NMDC have not been completed timely. By taking timely measures RINL would have enough reserves (more than Rs 3500 crores) for procuring raw materials and other timely expenses. Even the registered local traders are willing to come forward and provide funds to support RINL and even that is being ignored.
RINL has a long term agreement with NMDC for supply 100 Million Tonnes (MT) of raw material per annum but NMDC is not honoring the bipartite agreement. They sent only 40 MT iron ore in this 9 months period. Remaining iron ore is bought by RINL from southern states at high cost by paying extra transportation charges. RINL has bought 51% shares of Orissa Mineral Development Corporation (OMDC) by paying Rs 351 crore and till date we couldn’t manage to get any iron ore from them.
Blast furnace 3 has been shut down since last 2 years from 21 January 2022, stating insufficient raw materials and to overcome this situation RINL has floated an EOI to gather funds for working capital/running the Blast furnace 3. Nearly 25 interested bidders have come forward for the same and among them 6 are not in the business of making steel. Management unanimously took decision and made an agreement/MOU with Jindal Steel and Power Limited. Tata also had come forward to provide 100 million dollars on interest basis to fulfill working capital deficit.
Though Jindal was not among the 26 interested bidders, the top management of RINL entertained Jindal Steel and Power limited (JSPL). They intimated the unions that MOU with JSPL is on conversion mode and it will be beneficial for the plant. Unions have demanded to disclose the MOU, however the CMD refused to disclose the MOU. At the same time similar proposal was shared with SAIL and we believe that it would be win win situation for SAIL as Gangawaram port is being used to import raw material and to export the finished product there by reducing the freight expenses.
The RINL Management has not given a copy of MOU to any trade union. As per information obtained by the unions, JSPL will be supplying raw materials which include iron ore, coal, coke and pci coal for producing 2 lakh tonnes steel per month. Out of which JSPL would take 90,000 tonnes and the rest 110,000 tonnes can be utilised by RINL for rolling it’s finished product. JSPL would pay conversion charge of Rs 8400 per tonne of steel to RINL for the 90,000 tonnes they would be purchasing per month. The selling price of steel in the open market is Rs 43,000 per tonne. The actual cost of conversion from raw material to steel would be Rs 13,000 per month if the fixed costs such as depreciation, salaries, interest burden etc. are added. This fixed cost is Rs 1200 crores per annum for producing 90,000 tonnes of steel. However, Jindal is refusing to pay these charges. In effect it is getting iron ore converted to steel at very low cost using RINL infrastructure without having to pay for this infrastructure which includes manpower. With this low cost of conversion of its raw material, JSPL would be making huge profits by selling the steel RINL produces in the open market.
The final conclusion of MOU with JSPL is that with very less investment JSPL would be making huge profits and the top management is trying to force this MOU at any cost.
Hence we demand to cancel MOU with JSPL!
Statement of Steel Plant Employees Union (CITU), RINL