Iron ore miners agree to e-auction route a try

Govt overcomes major hurdle by convincing private miners to sell on a common platform

Iron ore producers in Odisha have agreed to participate in proposed e-auction of minerals to be conducted by MSTC India under the supervision of state Steel and Mines Department, on a trial basis. With their approval, the state government has overcome a road block to implement its much awaited scheme.

“In the latest discussion, the miners have decided to join the e-auction process on trial basis as they are still sceptic about the process. The process should start sometime in January 2014 after the winter session of Odisha assembly is over,” said a senior official with state Directorate of Mines.

Traditionally, iron ore trade takes place in a bilateral way, where each buyer has to negotiate with miners for prices, thereby giving miners the opportunity to decide the rate and buyers suitable for them. Steel makers and political parties allege that miners often quote the traded price lower in paper, to avoid higher royalty and other taxes and also prefer outside Odisha buyers to sell the mineral, since they offer extra price for high quality iron ore. To address the raw material problem of domestic steel makers, the Odisha government issued an executive order in December 2012 for all iron ore miners, directing them to reserve half of the monthly output for local industries. However, the order is far from achieving desired result, as steel makers have complained that miners often keep the prices high and preferred to curb output instead.

When the Odisha government decided to implement e-auction of minerals on a common platform, in line with Karnataka, private miners stalled the move, saying an earlier Supreme Court order in this regard was meant for the southern Indian state only and to implement it in Odisha, the state has to get a separate permission from the apex court.

In Karnataka, a Central Empowered Committee (CEC) conducts iron ore e-auction, as per a Supreme Court directive.

“Since the miners have now agreed to take part in the process, we may not need SC intervention,” said the mines directorate official.

The miners, on the other hand, said though they are sceptical about the process, they want to give it a try on expectation of better prices for their produce.

“The mine owners have agreed reluctantly to join the e-auction process on trial basis, as our issues of old clientele base, evacuation of mineral have not been addressed properly. Still, we are interested to join the process for its better price discovery mechanism,” said Prabodh Mohanty, spokesperson for Eastern Zone Miners’ Association (EZMA).

Odisha accounts for about 35 per cent of all India iron ore deposit, with production ranging between 60-62 million tonne each year. It produces 62-64 grade iron ore lumps, suitable for making steel via Direct Reduced Iron (DRI) production method. Large iron ore producers include Ahluwalia, Rungta and Essel Mining.