Mine owners offering iron ore at unrealistic prices: Odisha Steel Federation

Sale price at Rs 5,600/tonne compared to raising cost of Rs 600

The All Odisha Steel Federation (AOSF), a body representing the interests of local steel units and sponge iron manufacturers, has stepped up the ante on mine owners, accusing them of making huge profits by selling iron ore to end use industries at exorbitant prices.

AOSF held that after the notification of the state steel & mines department dated December 5 last year that made selling of at least 50% of their ore to local industries compulsory, two lessees- Sirajuddin and Indrani Patnaik had offered ore for sale to such units.

While Sirajuddin had offered 2,50,000 tonne of iron ore for sale to local units in December 2012, Indrani Patnaik offered 1,65,000 tonne. The sale price of both the lessees stood at Rs 5,600 per tonne against their raising cost of Rs 600. AOSF has estimated that at this sale price, Sirajuddin and Indrani Patnaik are raking in monthly profit of Rs 125 crore and Rs 82.5 crore respectively.

"At these rates, each mine owner is earning Rs 200 crore per month. These mine owners are exploiting the steel units for the past 3-4 years. They are intentionally quoting such a high rate that the local industries cannot afford. Can any one in the government justify why the mine owners sell at Rs 5,600 per tonne when the raising cost is only Rs 600?," P L Kandoi, president, AOSF said in a memorandum submitted to the inter-ministerial committee of the state government.

A senior official of a leading mines owner in the state termed the allegations as 'baseless'.

"Prices of iron ore are market driven. When steel makers from other consuming states are buying at that prices from us and still manage to make profits, there is no reason for the local end-use industries to cry foul”, he said.

The committee has been constituted to formulate a policy for long-term supply of ore to local end-use industries.

Kandoi blamed the practice of offering negligible quantity in tenders of Odisha Mining Corporation (OMC) for the unrealistic high prices.

"Its (OMC's) defective price discovery mechanism is fixing high benchmark prices for mine owners”, he said.