High prices of iron ore routed through e-auctions and issues
linked to iron content in dispatches are forcing steel and sponge iron-makers
in Karnataka to look to Jharkhand and Orissa.
Mr Dinesh Kumar Singhi, Managing Director of Karnataka-based
BMM Ispat, said that the base price of Rs 2,010 a tonne for the 57-per-cent
iron grade in the last auction was too high, considering that buyers were
getting the same earlier from NMDC Ltd for about Rs 1,400-odd a tonne, before
the Supreme Court on September 2 directed the State to hold e-auctions.
He said there were no takers for about 65 per cent of the
stocks lined up for the last auction conducted on October 14.
When told that NMDC officials had said the pricing was in
line with those in China and Japan, he said the price of 57-per-cent grade in
China was about $110 (Rs 5,390), which factored in about Rs 3,000 for
transport, beside 20 per cent export duty.
On Karnataka e-auction prices, he said in addition to the
base price, buyers would have to pay 10 per cent for royalty, 12 per cent as
forest-development charges and 1 per cent cess, totalling 23 per cent more,
which pushed the price to Rs 2,472 a tonne. Transport would cost another Rs 750
a tonne.
Further, there were quality issues with supplies obtained
through the auctions. While NMDC follows the practice of compensatory payment
if the quality (grade) is below what is quoted (laboratory analysis by
third-party assayers is an accepted industry practice), e-auctions do not
provide for the same.
In comparison, the 63.5-per-cent grade from Jharkhand could
be got at Rs 4,200 a tonne, inclusive of the transport cost of Rs 2,200.
Besides, quality and timely delivery are assured. Continuous running plants
cannot be shut down and delivery schedules to clients have to be maintained, he
said.
Leave a Reply