NMDC to e-auction 2 lakh tonne iron ore

Country's top iron ore producer National Mineral Development Corporation (NMDC) today said it was looking to e-auction about 2 lakh tonnes of the precious steel making raw material from its Karnataka mines within this week.

"Last week, Supreme Court had given a direction that all sales to long-term or spot customers by NMDC will have to be done through e-auction. I believe this will take place this week. We are looking at a minimum quantity of 2 lakh tonne," NMDC Chairman Rana Som said.

Som said the main concern at this point was the problem of evacuation as stocks are piling up. Till the e-auction takes place, the company has to resort to a minor production cut, he said.

NMDC mines about 1 million tonnes of iron ore every month from its Bellary mines in Karnataka.

"For two weeks we have achieved the targeted production of 33,000 tonne per day. But then during the last four-five days the production has been less at about 26,000 tonne due to accumulation of stock as we could not start e-auction till date," Som said.

He added that the company had a stock of about 1.5 lakh tonne in Karnataka including 92,000 tonnes of iron ore lump.

The state-run PSU has cut its supplies to all eight long term customers, including JSW, Ispat Industries, Kudremukh Iron Ore and Lanco following a Supreme Court order last Friday.

The ruling set aside the long-term supplies agreement of NMDC with various steel units in the state, asking the firm to make all supplies in Karnataka only through the e-auction.

This resulted in production cuts by steel units including JSW which is running its Vijayanagar plant at 30% capacity since Saturday due to iron ore shortage.

In its earlier orders, the apex court had allowed NMDC to produce 1 million tonnes of iron ore per month from its mines in Karnataka.

It had given permission to e-auction 25.88 million tonnes of iron ore lying at various mines in state and fixed the quantity at 1.5 million tonne per month.

"We are trying to comply with Supreme Court order in letter and spirit," Som said.

He added a monitoring committee of the state government would supervise the e-auction and will organise it in a manner that the problem of evacuation is rightly addressed.

Earlier, addressing mediapersons, Som said e-auctioning would give the company a better price.

However, it will "not allow us to evacuate as fast as we can do under long-term contracts", he said.

The Maharatna firm till now has been selling iron ore from its Bellary mines in long-term prices and not spot prices.

At present, the NMDC has annual iron ore production capacity of about 30 million tonne from 3 fully mechanised mines in Chhattisgarh and Karnataka.