A major relief for Odisha based steel industry, who were finding it tough for survival due to Iron ore. Based on 50:50 gazetted notification (attached), Odisha government has fixed quarterly allocation of Iron ore to state based companies as per their requirement. Prices are fixed on IBM monthly prices, which are quite lower than current market prices.
According to sources, about 6 MnT of Iron ore has been allotted from all operating mines (Serajuddin, Rungta, Indrani, NE, Essel Mining, SN Mohanty etc) for Q4 FY15.
“These allocations have come as a big relief for domestic steel mills, which were closed due to high Iron ore prices,” said a Sponge manufacturer based in Odisha.
Sources also mentioned that prices fixed are quite low compared to current market price, for instance, Fe 62.5 Iron fines is fixed at INR 3,007/MT against current prices of INR 3,500-3,600/MT ex-mines. Similarly, Fe 62-65 Iron ore lump (5-18 mm) prices are fixed at INR 5,750/MT against market prices of INR 6,200-6,400/MT.
What is 50:50 Rule?
On 5 Dec’12, the Odisha Steel & Mines department had issued notification directing all miners to reserve 50% of their monthly Iron ore output for state based companies after captive consumption, citing mineral development and other rules contained in the MCR as well as raw material need for local steel companies, as the cause for such action.
Many miners had moved to the Odisha High Court challenging the legal validity of the notification; terming the restriction of mineral sales, a breach of the Constitution.
Hearing on writ petitions filed by AOSF (All Odisha Steel Federation) and FIMI (Federation of Indian Minerals & Industries), the High Court said the government has the right of pre-emption on minerals as mentioned in the section 27 of MCR and hence the notification was legally valid.
Further, the High Court asked the state government to form a mechanism, which will define equal supply to state based companies at a fair price. Thereafter, the state government issued a gazetted notification, which gave a direction how will they ensure smooth supply of Iron ore at reasonable price.
For Gazetted Notification by the state government: Click here
Correction: Prices fixed by IBM (Indian Bureau of Mines) are Basic; excluding Royalty of 15%
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