August 29, 2008

RINL to gain after inauguration of Gangavaram Port

BL reported that Gangavaram Port is getting ready for operations, with 5 berths in the first phase and the inauguration may take place sometime in May or June 2008. The commissioning of the port is a welcome development for the Rashtriya Ispat Nigam Limited as it is situated in the backyard of the plant, enabling the latter to cut down substantially on freight.

As per report, RINL and the Gangavaram Port have come to an understanding, reserving two berths for the plant for its imports and exports.

Currently, RINL imports 3 to 3.5 million tonnes of raw materials, mainly coking coal from Australia, limestone, boiler coal and iron ore pellets. The material is discharged at the Visakhapatnam port in the inner harbor and brought to the plant by rail.

Commissioning of Ganaavaram Port is likely to help RINL cut costs of raw materials due to following reasons

1. It is estimated that the plant spends INR 120 crore to INR 130 crore a year on rail freight and with the commissioning of the Gnagavaram port, the need for rail transport is obviated as the material would be imported at Gangavaram and taken to the plant through conveyor belts.

2. Gangavaram port has the deepest draft in India with 21 meters dept as against the 11 meters to 12 meter of the inner harbor at the Visakhapatnam port making it capable of handling Capesize vessels. According to rough estimates, it may be possible for RINL to save 30% or so on oceanic freight or at least USD 5 to USD 8 a tonne.

3. As Gangavaram is a new port with fully mechanized un loading facilities and there is no congestion, the discharge of material will be much faster and there will not be any hassles. This would again bring down the ocean freight rates to some extant.

RINL also exports about 600,000 tonnes of pig iron and steel products and can utilize this facility, if exports continue.