Orissa is one of the few states in India with vast natural resource endowments suitable for Iron & Steel / Metallurgical industry. The mineral resources in the state include Iron Ore, Coal, Manganese Ore, Chrome Ore, Bauxite and Limestone. The vast proven reserves of these minerals also suggest the future potential for mineral based activities in the state. The following table presents the share of mining reserves in Orissa.

Within Orissa, areas such as Jajpur, Keonjhar, Koraput, Angul and Jharsuguda are the focal points of mineral based activities in the state and have already attracted mining and downstream value-added industries. These locations account for a majority of the value of mineral production in the state estimated to be over Rs. 2500 crores, a third of which is also exported. Jajpur alone contributes over 10% by value of mineral production and the state government has received several enquiries from domestic as well as international investors to establish mineral based industries in Jajpur region, including several steel plants.

MINERAL RESERVES IN ORISSA AND INDIA, 2003-04

Within Orissa, areas such as Jajpur, Keonjhar, Koraput, Angul and Jharsuguda are the focal points of mineral based activities in the state and have already attracted mining and downstream value-added industries. These locations account for a majority of the value of mineral production in the state estimated to be over Rs. 2500 crores, a third of which is also exported. Jajpur alone contributes over 10% by value of mineral production and the state government has received several enquiries from domestic as well as international investors to establish mineral based industries in Jajpur region, including several steel plants.

The Jajpur cluster as envisaged by Government of Orissa is broadly divided in to two Zones. Zone I consists of a steel complex near Dubri and Zone II consists of the mining areas in Daitari. The mines located in the area are owned by OMC, TISCO, IDC, Jindal, IMFA, Misrilal etc. NINL with an output of about 1.1 mntpa of steel is located in Zone I. Further Government of Orissa has received applications from various steel producers for setting up of industrial units in the Zone. It has already allocated an area admeasuring 2500 acres for the same. The industrial projects are at various stages of completion.

Key factors contributing to attractiveness of Jajpur as a Steel and Metallurgy cluster.

• Proven and diverse mineral reserves
• Strategic location of the cluster combined with the advantages of nearness to key infrastructure lifelines like Ports, Rail linkages, road network, water & power availability etc.
• Existing base of mineral based industries and the proposed investment proposals
• Value addition made imperative through a combination of policy interventions and market forces

Jajpur Centre has factor advantages that make “logistic integration” from “mines to port” possible. Likewise, “industry value chain integration” is also possible from “minerals to finished products”. These possibilities make Jajpur unique in the Indian context relative to other mineral rich locations.

Value addition imperatives:

Recognizing the potential of Jajpur Cluster, the Government of Orissa is actively encouraging investors to increase the extent of value addition to the basic raw materials taking full advantage of the favourable conditions. Notwithstanding the policy interventions, market forces and competition (both domestic & international) are making it imperative for manufacturers to realize greatest possible value addition leveraging local factor advantages. This partly explains the fully integrated nature of the investment proposals received by the Industries Department of Government of Orissa.

Vision for Integrated Steel and Metallurgy Cluster - Key considerations :

There are some important considerations that have shaped the Orissa Government’s vision for Jajpur. First, the government has considered the entire influence zone where the potential economic impact of mineral based activities can be felt. Jajpur is spread over 2888 Sq Km and has a population of nearly 1.4 million. Mining and mineral based activities make significant contribution to the local economy in terms of employment generation and value of output. Hence a regionally integrated view has been taken for identifying intervention areas.

Second, while the economic influence area is widespread, it has also been observed that mining / mineral based activities are concentrated in specific pockets such as Duburi and the physical mine areas. As a result, any government interventions are concentrated in specific pockets to realize the greatest possible infrastructure impact for benefiting industries.

Finally, since minerals and the final metallurgical products require significant logistics & infrastructure support, the state government has taken an integrated view while evolving a development plan for Jajpur encompassing the “logistics chain” from mines to port (i.e.. Paradip). The state government has similarly taken an integrated view of the “industry value chain” spanning mining activity to final steel production. Consequently, the specific interventions presented in this report address the principal infrastructure gaps in both the logistics chain and value chain to make a compelling case for attracting investments.

The Government wants to harness the economic potential of the region. The idea of developing a steel and metallurgical cluster is to provide and enhanced economic opportunity to Small and Medium Enterprises located in the region. Currently, there is a well-established SME sector, which relies on large-scale mining and steel making activities in the region. With the proposed planned development of the cluster and location of large-scale steel making units, the SSI sector will get further boost in the region. It is estimated that the cluster development will lead to further development of SSI sector, especially in the area of ancillary units to the large locating industries.

It is to be noted that currently the SSI sector is heavily depended on the low value- add mining activities, thereby providing extremely low margins to various entrepreneurs. As steel making is a high value added activity, it will not only improve the financials of the existing SSI units but also provide substantial impetus for their sustained growths.

GRAPHICAL REPRESENTATION OF IRON & STEEL VALUE ADDITION: