Odisha should appoint iron ore price regulator, says ICC

Steel producers in Odisha unable to buy ore at current market price as demand for finished steel poor

To check artificial jacking up of prices of iron ore, the Odisha government must appoint a regulator to oversee the supplies and rates offered by private miners and state-run Odisha Mining Corporation (OMC), said the Indian Chambers of Commerce (ICC).

“The state government could appoint an iron ore price regulator which may be empowered to regulate and monitor the supply of iron ore from OMC and private mining lessees to the iron and steel industries in Odisha,” said Vishal Agarwal, chairman of the Odisha expert committee of ICC, at the second edition of Minerals and Metals Odisha conclave here.

The steel producers in Odisha are unable to buy ore at current market price as demand for finished steel is poor, he said.

As iron ore output in the country is declining despite rising local demand from user industries, there is a need for such regulator, he argued.

Iron ore production in India has come down to 140 million tonne (mt) last year, compared with 220 mt in the previous year. During the same period, ore demand from the steel industries in the country has gone up from 100 mt to 150 mt, thereby supporting the rates.

The Union government has already imposed heafty export duty on export of iron ore in order to make the raw material available for domestic steel mills. The duty must be raised further to ensure better supplies, said the ICC official.

“In spite of 30 per cent export tax on iron ore fines, the exports are at approximately 15 million tonne and prices in domestic market are much higher than the ex-mine realisation for exports. Hence, export duty on iron ore fines should be increased from 30 per cent to 40 per cent,” Agarwal said.

To address the supply issues of Odisha-based steel makers, the state government came up with an executive order that mandated iron ore miners to reserve half of the mineral for local use. Though some steelmakers said supply issues still remained, OMC said the policy has helped to improve supplies.  

“The 50 per cent mandatory sales policy has improved supplies as we can see a lot of buyers , who used to buy large quantity of ore from us, have scaled down their purchases from OMC. When we enquired, they said because of the reservation policy, they are now getting ore from other private miners,” said Saswat Mishra, chairman and managing director of OMC, which sells nearly half a million tonne iron ore every quarter through auction.

The ICC said, along with OMC, iron ore produced by miners who do not have any end-use plant must sell it through the auction route via OMC untill the long-term linkage policy does not take off.

“Alternatively, the entire quantity of iron ore mined in Odisha can be sold through e-auction platform with fair reserve price by giving priority to the Odisha-based industries,” said Agarwal.

Upendra Behera, additional chief secretary of Odisha government, said the matter of long-term linkage of iron ore to steel units is under consideration of the government and soon some decision could emerge in this regard.