State-owned Odisha Mining Corporation’s (OMC) e-auction for 619,000 t of iron ore lump was concluded at an average of 42.8% over the set base price and entire quantity offered got booked. The state-owned miner had increased the quantity to be put under the hammer to 619,000t against 522,000 t declared on 25 May’21, as per SteelMint reports. Few of the key buyers in today’s auction were – Tata Steel, JSPL etc.
The base price of the material on offer had been increased by up to INR 1,500/t against the floor price set for the last e-auction on 31 Mar’21. The bids increased significantly against the set base price, sources confirmed to SteelMint. Prices hit a record high in today’s auction, as per SteelMint’s assessment.
SteelMint’s Odisha index of 5-18 mm (Fe 63%) was recorded at INR 12,250/t exw on 29 May’21, up by INR 1,400/t, m-o-m.
Prices have taken a beating due to tight material availability in Odisha and lower production by India’s leading iron ore producer, state-run miner NMDC, in Apr’21 and May’21 due to lockdown restrictions in Chhattisgarh where, instead of the usual three shifts, only two shifts could take place.
Notably, the rates for domestic sale of iron ore at OMC are decided on e-auction basis. About 30% of the total mineral extracted is earmarked for national e-auction and the remaining 70% is for long-term linkage.
OMC becomes largest merchant producer – OMC emerged as the largest merchant miner in Odisha in FY21 with 13.30 mn t of production against 12.38 mn t in the previous fiscal (FY’20), a growth of 7% year-on-year.
What’s more, the miner may also become the top-most producer in the state by FY’22, with a consolidated capacity of 34 mn t. It may be recalled that JSPL had won the Guali mine at the Odisha auctions in early-2020 by promising to pay a premium of 144%, while Jharkhand-based Shyam Ores had bagged Jilling-Langalota for a premium of 132%. These two mines were allotted to OMC under the new mining reforms for a period of 10 years and the miner is required to pay a premium 1.5 times of the royalty (equivalent to 22.5%) for these two mines.
Key merchant leases in Odisha to expire
Mining came to a standstill at Sarda Mines Private Ltd (SMPL) after the company was accused of exceeding its pro-rata production limit once again.
On 28 May’21, SMPL was again served a notice for producing 2.154 mnt or INR 1,042 crore worth iron ore in excess of its EC limit during FY 2020-21 from the Thakurani Block-B iron mines in Odisha’s Keonjhar district, according to a copy of the letter accessed by SteelMint. Sarda Mines recorded iron ore production of 6.2 mn t in FY’21, as per SteelMint data. Also, Essel Mining’s lease for the Nuagoan, Kadodiha mine will expire towards on 28 Aug’21, as per SteelMint reports.
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