Bhushan Steel bags Odisha iron ore mine in auction

Bhushan Steel outbid Tata Steel, JSW, JSPL

With a quote to share 100.05 per cent revenue from mining operation with the Odisha government, Bhushan Steel (BSL) has bagged the Kalmong west iron ore mine in Sundergarh district in an auction for the property which saw some aggressive bidding by country’s top notch steel companies.

The companies which participated in the bid for the mine, having a reserve of 92 million tonne, included Tata Steel, JSW, Jindal Steel and Power (JSPL), Tata Sponge and two Bhushan firms- Bhushan Steel and Bhushan Power and Steel.

BSL, which finally won the bid, runs a 4.7 million tonne integrated steel plant at Meramundali in Dhenkanal district of Odisha.

The bidding for iron ore property is mainly done on the basis of revenue sharing from mining operation with the state government.

The revenue sharing of 100.05 per cent as quoted by BSL, excludes payment towards royalty, contribution to district mineral foundation (DMF) and National Mineral Exploration Trust (NMET) which together would account for payout of another 16.8 per cent of the value of mineral raised by the company.

Beyond this, the company also has to bear the cost of investment to open the mine and operate it.

It may be noted, this is the second iron ore property to be auctioned in the state. Last year, Essar Steel had bagged the Ghoraburhani-Sagasahi iron ore block having a reserve of 100 million tonne with a quote to share 44.35 per cent revenue with the state government.

But today’s auction saw revenue sharing quote by companies shooting up by more than 100 per cent compared to the last year.

Explaining the cause of such aggressive bidding, an official said, “With the property being offered for captive use, steel companies were eager to grab it for their raw material security. Besides, with the steel prices looking up they were not hesitant to quote high rate of revenue sharing as they thought they can recover the cost from conversion of iron ore to steel.”