The latest round of iron ore e-auctions by state controlled miner Odisha Mining Corporation (OMC) invited lacklustre response with only 40% of the offered quantity booked by the end users. OMC had offered 508,900 MT of iron ore and out of this, only two lakh tonne was booked. Both iron ore lumps and fines were on offer from some of OMC’s key operating mines like Gandhamardhan, Daitari and Koira.
Industry sources said the response to the auctions was weak as OMC continued its stand to hike base prices of lumps and fines. The floor price of lumpy ore was in the range of INR 2,200-2,750/MT. Similarly, fines’ reserve price was fixed in the band of INR 500-1,600/MT. As per sources, bids received were at base price. The raise in floor prices by OMC was despite plunge in sponge iron prices of the order of INR 2,500-3,000/MT since the last auctions.
“OMC’s floor price at iron ore e-auctions is based on the pricing mechanism adopted by the Indian Bureau of Mines (IBM) which is faulty. Pricing mechanism has to be made more realistic and transparent”, said a senior official with a steel company.
OMC has refused to budge from its pricing stand, ignoring concerns flagged off by steel makers. R Vineel Krishna, Managing Director, OMC could not be immediately contacted for his comments.
OMC iron ore e-auction result
|
Mines |
Size (mm) |
Fe (%) | Base Price as on 6 Apr’17 |
Base Price as on 05 Jun’17 |
Change (in INR/MT) |
Offered Quantity (MT) |
Allotted |
| Gandhamardan | 10-180 | 65 | 1,900 | 1,900 | = | 10,000 | 1,000 |
| 10-40 | 62 | 2,200 | 2,200 | = | 70,000 | 42,000 | |
| 10-30 | 62 | – | 2,200 | = | 2,900 | 0 | |
| -10 | 64-62 | – | 1,300 | = | 14,000 | 0 | |
| -10 | 60-62 | 900 | 900 | = | 25,000 | 0 | |
| -10 | 54-58 | – | 500 | – | 25,000 | 15,000 | |
| -10 | 60 | – | 600 | – | 17,000 | 0 | |
| Kurmitar (Koira) | 10-40 | 62 | 2,700 | 2,750 | +50 | 150,000 | 108,000 |
| -10 | 62-60 | 900 | 1,000 | +100 | 25,000 | 4,000 | |
| Daitari | 10-40 | 62 | 2,550 | 2,600 | +50 | 120,000 | 0 |
| -10 | 64-62 | 1,650 | 1,600 | -50 | 50,000 | 30,000 |
Base prices in INR/MT on ex-mines basis; including royalty
Source: SteelMint Research
Though OMC has drawn a roadmap for higher iron ore output targets and agreed to augment production at its mines, the results have not yet shown up at the ground level. OMC had set a target to achieve a production figure of 20 MnT by 2017-18 but it looks challenging given OMC’s current actual annual production hovering around 6 MnT.
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