Odisha Mining Corporation under stress to slash ore prices at next e-auctions

State-owned mining company Odisha Mining Corporation (OMC) is facing pressure to slash the floor price of iron ore at its next e-auctions to be held shortly.

With plummeting iron ore prices and also OMC's piling inventory, the mine PSU is left with no other option but to slash prices if it is serious to draw buyers for its ore.

"OMC's e-auctions have turned to be a damp squib because of the unacceptable base price. Floor prices of iron ore lumps from its Daitari mines need to be corrected by Rs 300-400 per toone from the current level of Rs 2,200 a tonne", said a senior official of a steel firm.

OMC has stuck to its high pricing regime despite repeated pleas by end use industries to slash prices in the wake of plunging international ore prices. Its stockpile of iron ore fines and lumps has climbed up to over six million tonne.

"It is expected that OMC acts in the interest of the state and reduces prices of lumps & fines drastically for supporting the end use plants and pellet plants in Odisha. The formula that OMC may consider is cost plus basis as well as enhancing production significantly. The end use plants have been held at ransom by the merchant miners and thus readily move all demand to OMC," said Manish Kharbanda, executive director and group head (mines & minerals), Jindal Steel & Power Ltd (JSPL).

Girish S N, managing director, OMC was not immediately available for comments on the matter.

"At a time when prices of finished steel products have plunged by up to Rs 2,500 per tonne, the government needs to step in to help steel makers reduce their input cost. This can be done by slashing base price of iron ore offered by OMC at its e-auctions. Else, the operations of steel companies would become unsustainable", said Ranjan Mishra, executive director, Visa Steel.

At its last e-auctions held on October 8, OMC drew a blank for high grade iron ore offered from its Gandhamardhan mines. OMC had offered 70,000 tonne of 64 Fe grade ore and 20,000 tonne of 65 Fe grade ore. For its Koira mines (64 grade Fe), OMC managed to book only 152,000 tonne out of the offered quantum of 270,000 tonne.

Bhushan Steel, a key buyer from OMC feels the price correction has been necessitated by slump in market prices and also in the interest of the state.

"OMC need to follow the market trend and reduce base prices at its auctions. They cannot stick to high prices when the steel companies are bleeding. The base price for iron ore fines needs to be corrected to Rs 1000 a tonne while that of lumps should be fixed at Rs 1,800 per tonne", said Anil Ahuja, executive vice president, Bhushan Steel.