After a string of lukewarm e-auctions, state controlled miner Odisha Mining Corporation (OMC) has managed to find its feet. At the last round of iron ore e-auctions held on September 29, OMC offered 896,000 tonne of iron ore of which 82 per cent (or 736,000 tonne) was booked.
Industry sources attributed the overwhelming response to a bout of aggressive bidding especially by players like Tata Steel. Odisha has revised the ore linkage policy for OMC which allows even those steel companies with captive ores to participate in the auctions if they are facing deficit to run their operational steel mines. Tata Steel has no exclusive mine for its new three million tonne steel unit at Kalingangar in the eastern state of Odisha. The steel maker has embarked upon expansion of its captive Khandabandh mines to five million tonne (mt) a year from two mt now at an investment of Rs 2300 crore. But facing regulatory hurdles, Tata Steel is buying from OMC to stockpile ore.
A section of the steel industry feels the floor price by OMC is still very high. The base price for lump ore was in the band of Rs 1700-2000 a tonne for varying grades of iron ore (Fe content ranging from 62-65 per cent).
“The state government’s revised policy, permitting even the steel companies with captive ore sources has distorted the price balance at e-auctions. As they bid aggressively, the industries without captive sources are finding it difficult to book ore. This is no level playing field”, complained a senior executive with a steel firm dependent on OMC for iron ore supplies.
Calibrated lump ore (62 per cent Fe) offered by OMC from Koira of 300,000 tonne was booked completely at a premium of 31 per cent over the base price. Fines of an equivalent grade from the same mines were sold at a premium of 21 per cent. The Gandhamardhan iron ore mines (65 per cent Fe) also got a premium of 23 per cent despite the high floor price of Rs 2000 per tonne.
In case of chrome ore, OMC had offered 64,240 tonne of chrome ore of which 51,290 tonne was booked, meaning a success rate of nearly 80 per cent. Average base price for chrome ore was Rs 8246 a tonne.
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