Auction of iron ore in Karnataka may not fulfill demand of mini-steel plants 

Though the latest move by the Government to auction
accumulated iron-ore has brought a sign of relief to major steel makers in
Karnataka, the medium- & small scale operators may still have to face the
shortage of iron ore due to the following reasons:

* Availability of ore
may not meet the demand- The total requirement of iron ore for the people
who are dependent on Karnataka is over 3 million tonne. As of now, not more
than 0.7-0.8 million tones can come from NMDC. So the balance part has to come
from this auction as all other mines are closed.

* Iron ore to auctioned
includes mostly Low grade-  The iron the
inventory which is available as per the CEC report has 1/3 quantity of lumpy
ore and 2/3 quantity of fines. And out of the 2/3, a good portion of it is less
than 62% ferrous content. And lower grade ore cannot be used mini-blast
furnaces which do not have center plant or pelletization plant or beneficiation
plant.

* Price in auctions
to remain high– Another important thing about the auction is that the base
price or reserve price is fixed with what is the price of NMDC. So in the
auction, the price will definitely go up. It will be much higher than the
reserve price and the cost for everybody will go up, which means this
mini-blast furnace operators and all the industry in Karnataka will no more be
competitive

According to RK
Goyal, managing director, Kalyani Steel, “Even though majority of this ore is
in the form of fines, but I am sure we will get some quantity out of this
auction. However, this auction will not fulfill our total requirements. Our
request to CEC and Supreme Court is to increase the total quantity of auction
so that particularly mini-blast furnace operators, who can consume only
calibrated ore or lumpy ore, can get larger quantity and they are able to start
their furnaces. So we are waiting for the first auction to come up to get the
ore, and to be able to star our furnaces.”

If 1.5 million tonne is to be auctioned, I don’t think we
will be able to operate our plant at a capacity valuation of more than 50%,
even by including ore which we are likely to get from NMDC, he added.