Steel major JSW’s scheduled e-auction of iron ore in the form of run of mine (ROM) from its Nuagaon and Jajang iron ore mines in Odisha is in violation of rules 2(f), 39 and 49 of Mineral Concession Rules, 2016 and will lead to revenue loss in the form of premium, royalty, DMF and NMET to the state government.
This was alleged by a citizen’s forum in Odisha that has submitted separate petitions to Indian Bureau of Mines, Bhubaneswar and the Department of Steel & Mines, Odisha government.
Incidentally, JSW has deferred the e-auction, as per an MSTC notice accessed by SteelMint.
It has been alleged that the quantity for the auction consists of two lots: one lot of iron ore ROM of 100,000 t, size 10-180mm (Fe 60-62%) and another 100,000 t more, size 10-180mm (Fe 62-65%) from Nuagaon mine; the other lot of 100,000 t is from Jajang mine, size 10-180mm, (Fe 56-60%).
The size specification of ROM in the e-auction notice is 10-180 mm whereas ROM is defined under rule 2(f) of MCR 2016 as raw, unprocessed material in its natural state obtained after blasting or digging from the mineralised zone of a lease area.
It has been alleged that JSW is selling lumps under the garb of ROM. Further, the grade of ROM from Jajang iron ore mine has been shown as Fe 56-60% whereas there is no such grade band of iron ore either in statutory return Form F 1 and Form G1 under rule 45 of Mineral Conservation and Development Rules, 2017.
IBM, Bhubaneswar has been asked to clarify that the sale price of ROM will not be included in the calculation of average sale price (ASP) of different grades of iron ore lumps and fines as ROM, as lumps and fines are different commodities defined under law.
It has been further pointed out that the price determination for ROM should ensure that the weightage average price of lumps and fines in ROM is similar to the price of iron ore lumps and fines of similar grade sold separately in the market.
Moreover, many iron ore mines in Odisha have been won by various bidders at exorbitant and unviable premiums before Mar’20 – in most cases higher than the IBM price. It has been alleged that the new lessees are manipulating grades of ore and prices to compensate the high premiums.
Lower floor prices in the range of INR 2,400- 2,500/t of iron ore lots under JSW’s auction notice against higher prevailing market prices for lumps and fines are leading to loss of revenue to the state government, it has been alleged.
So, the government has been called upon to get clarification from IBM that the sale price of ROM will not be included in the calculation of the ASP of iron ore lumps and fines.
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