As reported earlier, state-run Odisha Mining Corporation (OMC) held an auction for 689,000 t of iron ore fines today, having had reduced the total material on offer from 1.06 mn t with an increased base price of INR 2,550/t compared with the last e-auction on 8 Jul’21. The material offered was from OMC’s Gandhamardan, Daitari, Koira, Jilling, Tiring Pahar and Guali mines.
The auction received weak response, with only 117,000 t* getting booked at the base price. The auction for 1.06 mn t on 8 Jul was annulled on account of unexpected softening of bids. The last auction saw a marginal rise of up to INR 250/t against the set base price. OMC sources had previously informed SteelMint that decline in bids at the auction was beyond expectation, given strong market prices of iron ore.
SteelMint’s assessment for iron ore fines Fe 62% prices in Odisha stood at around INR 9,400/t (inclusive of Royalty, DMF & NMET) on 17 July’21.
From now on OMC will be going forward with iron ore fines auctions at an interval of 30-40 days instead of the usual two-month gap between auctions that had been the norm. This move could be directed at keeping tabs on fluctuating ore prices and pre-empt the drastic fall in prices between auctions, or to divert the possibility of any unnatural fall in prices, SteelMint notes.
With 13.30 mn t of iron ore production in FY’21, OMC had emerged as the leading merchant miner in Odisha. The state PSU miner could also become the largest iron ore producer in Odisha with a consolidated capacity of 34 mn t/year, as per SteelMint estimates, especially after it bagged key iron ore mines after months of non-production following the Odisha auctions in 2020.
OMC reserves about 30% of its annual production for auctions, with the rest earmarked for long-term linkage customers.
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