Recent Iron ore e-auction conducted by Goa’s Directorate of Mines & Geology (DMG), did not receive response from steel mills. It will be interesting to see, how they respond to coming e-auctions.
After the Supreme Court permitted sales of already extracted 15 MnT Iron ore in Goa, first auction of 0.53 MnT ore was offered on 17 Feb, 2014. The second e-auction for 1.5 MnT will be held on 05 Mar, 2014.
The 1st e-auction could not attract Steel mills who are facing an Iron ore supply crisis since a couple of years. Only traders and exporters bid for the raw material and 535,000 MT Iron ore out of 536,000 MT was completely sold out.
Though the ore’s inferior quality and high moisture can be handled by steel plants, logistics is the major bottleneck. About INR 400-500/MT is borne by steelmakers for buying ore from Karnataka e-auction. Whereas, Goa will be costlier by three times.
Steel plant without beneficiation facility namely Kalyani Steel will not be benefitted and chose not to participate. High transportation cost is a major hurdle for BMM Ispat.
In conversation with SteelMint
Prasanna Acharya, Director of Mines & Geology, Government of Goa
“Goa had been exporting most of the ore before the ban because of low Fe% which signals that mostly traders/exporters will look forward to the e-auction.
On 17 Feb, 2014, e-auction prices were on the lower side owing to low Fe% in comparison to Karnataka ore and drop in Chinese Iron ore prices. Out of 15 MnT, 10.8 MnT is lying at mines head, 4 MnT at jetties and 0.2 MnT at port. At mines head and processing plants, 6 MnT is ROM only.”
P K Murugan, Senior VP (Commercial), JSW Steel
“At a cost of INR 1,200/MT it is not viable to procure the material by Raod transportation because trucks carry less volume, in addition, Port facility lacks. Fewer availability of rakes, is another reason. Mostly, imported coal is being moved by 8-10 rakes from Goa everyday.”
The material being offered was mined, before Supreme Court put a ban on Iron ore mining and exports from Goa (on 10 Sep, 2012), amid illegalities and environmental norms. On 11 Nov, 2013, sales of the material was allowed through e-auction process.
Speaking to several big and medium steel plants based in and Goa and Karnataka, SteelMint learnt that participation from domestic iron and steel mills in forthcoming e-auction will be limited to JSW Steel, Sesa Sterlite and few medium sized sponge manufacturers located in Goa.
Most of them said, current prices and quality of iron ore is not viable and they will prefer to source high grade ore from Odisha and Chattisgarh.
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