For the first time, Odisha Mining Corporation (OMC) will conduct online auction of chrome ore from Friday to get better price realisation of the mineral after it was forced to cut prices in April this year following poor market demand.
“On June 22, we will conduct the e-auction for outside Odisha buyers and on June 25, it will be only for state-based industries. Also on 25 June, we will launch online trading of chrome ore concentrate for which anyone from anywhere can participate,” said T D M V Satya Sai, assistant manager, MSTC Ltd, the agency appointed by OMC to conduct the e-auction.
MSTC Ltd is already conducting iron ore e-auction in Karnataka. If the chrome ore sale in Odisha goes well, then the company may provide the platform for e-auction of iron ore auction on behalf of the state-run OMC.
In the first such auction, OMC will sell about 50,000 tonne chrome ore and similar quantity of chrome ore concentrate. OMC has stipulated that while 70 per cent chrome ore will be reserved for local industries, there will be no such restriction for sale of chrome concentrate.
OMC has decided to conduct chrome ore auction through online after traders and industry users complained about its monopoly in deciding mineral prices.
“In the first lot, we have got about 60 registrations for the auction and we are still getting fresh enquiries from other buyers. Based on the supplies, we will be conducting chrome ore auction every fortnight,” said the MSTC India official.
Nearly all of India’s chrome ore is produced in Odisha with OMC having control over large part of it. Few players such as Tata Steel, Indian Metal and Ferro alloys, Facor and Balasore Alloys have also their captive mines in the state.
Chrome ore finds its usage primarily in stainless steel industries, apart from its use in refractories. Many Odisha-based industries depend upon OMC supplies to run their units.
Earlier this year, JSL Stainless, which has set up a one million tonne factory in the state, had complained about higher price charged by OMC and blamed the process adopted by the company for sale of chrome ore for artificial jacking up prices. JSL was importing the mineral to meet its requirement.
At the start of the first quarter this year, OMC had to slash chrome ore prices by as high as 30 per cent because of demand. For the material earmarked for sale in April-June quarter, it had cut the rates to Rs 12,003 per tonne including royalty for ore with 54 per cent chrome content, much lower than Rs 17,658 per tonne quoted in the previous quarter. As per the current policy, chrome ore attracts 10 per cent royalty on the selling price.
OMC attributed the price fall to lower buying interest due to spike in prices seen in 2011-12.
In 2011-12, chrome ore sales of OMC dropped to 258,901 tonne, against 913,357 tonne in the previous fiscal. In the same period, the rates of the mineral also moved to its highest level at Rs 17,658 per tonne, against Rs 12,000 per tonne seen in its previous corresponding period.