Rashtriya Ispat Nigam Limited (RINL) has fully shut down blast furnace No.3 (BF-3) at its Visakhapatnam Steel Plant (VSP), due to a severe coking coal shortage.

The company, grappling with raw material procurement issues and a working capital crunch, carried out the complete shutdown of BF-3 as a last resort to conserve remaining resources, according to market sources.

With only one furnace now running, concerns are mounting among trade unions that have been pushing for improved production to facilitate a turnaround.

At the start of last week, coking coal supply to the sole operational furnace at VSP partially resumed from Adani Gangavaram Port (AGPL), following a two-month disruption due to a workers' strike and subsequent court orders over outstanding dues, notes Kallanish. AGPL's conveyor belt facilitates deliver coking coal directly to VSP.

RINL is uniquely disadvantaged as the only major steel producer without captive mines, compelling it to spend heavily on sourcing raw materials.

While it has a long-term agreement to secure iron ore from NMDC's Bailadilla mines in Chhattisgarh, coking coal is mainly imported from Indonesia, Australia, and Africa.

As an alternative strategy to prevent further disruptions in coking coal supplies from Gangavaram Port, RINL has signed MoUs with Tata International Ltd and JSPL for raw material procurement.

To secure additional funds, RINL is negotiating with NMDC to lease surplus land at the VSP plant for setting up an iron ore pellet plant.

The VSP plant, which has an annual production capacity of 7.3 million tonnes, was expanded in recent years from 3mt over two phases, at an investment of INR 16,300 crore ($1.95 billion).

The allotment of captive mines, grant of working capital, and utilisation of its steel for state projects have been proposed as measures to improve RINL's financial stability.

Trade unions at VSP continue to demand the government address these concerns, fearing that delays might lead to privatisation, as outlined by the Cabinet Committee on Economic Affairs in January 2021.