State-owned Steel Authority of India Ltd (SAIL) managed to sell only 40,000 t of iron ore fines at auctions in Apr’21, SteelMint data shows. The dramatic decline in sales –compared to over 850,000 t in Mar’21 – is due to nil allocations from the company’s iron ore mines in Odisha – especially Bolani and Barsua that are under SAIL’s Raw Materials Division (RMD).
As a matter of fact, the mines in Odisha have been supplying a predominant portion of the material at SAIL auctions since May’20.
Auctions from SAIL mines in Odisha, scheduled on 20-21 Apr’21, were cancelled due to confusion regarding payment of additional amount as envisaged in the MMDR Amendment Act, 2021, a senior SAIL official informed SteelMint.
The Ministry of Mines has allowed government companies to sell up to 50% of their annual mineral production in the open market after meeting captive requirements. However, an “additional amount” is levied on all such sale, which has been fixed at 150% (or 1.5 times of royalty) for iron ore fines and 250% (2.5 times of royalty) for lumps.
Iron ore auctions from the mines in Odisha were cancelled in Apr’21 as there was lack of clarity on whether SAIL would have to pay 150% or 250% of royalty as the additional amount for sale of iron ore, SteelMint learnt from sources.
This is the reason why the base price for the auctions is yet to be fixed as apprehensions remain that the company might have to pay steep royalty rates for sale of comparatively low-grade ore.
However, it is expected that 150% would finally be settled upon as the additional payment for the auctions to recommence.
Auctions from Chhattisgarh:
The Rajhara and Dalli mines in Chhattisgarh under SAIL’s Bhilai Steel Plant (BSP), however, witnessed auctions in Apr’21, although the quantities booked were negligible. The auction on 28 Apr’21 for 28,000 t of iron ore fines from the Rajhara mine received bids at INR 4,600/t (including royalty, DMF and NMET).
The material put to auction was Fe60.3% grade and fetched bids INR 1,250/t higher compared to the last auction held on 26 Mar’21.
Another auction for 52,000 t of iron ore fines from the Dalli mines had to be re-conducted as the grade offered was low, according to sources. The material put to auction was between Fe58.10% and Fe56.33% grade. Out of 52,000 t offered, only 12,000 t received bids at INR 2,750-2,900/t (inclusive of statutory levies).
The paucity of high-grade (Fe62-63%) ore in Odisha is keeping prices supported at a time when there are few takers for low-grade material. Changes in the MMDR Act have driven iron ore prices higher, with PSU miner NMDC as well as merchant miners raising prices. State-owned OMC, too, raised the base price by over INR 1,800/t at its latest iron ore lump auctions. SteelMint’s Odisha index for Fe62% fines stands at INR 7,800/t.
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