Goa postpones 5th ore auction, anticipating lack of response

State had kept 2.18 mn tonnes of low-grade ore in fifth round after successful sale 5 mn tonnes in earlier rounds

Fearing a poor response, the government of Goa put off on Tuesday its fifth round of iron ore auctions. “We will conduct the auction shortly,” said Parag Nagarshekar, deputy director, department of mining and geology.

The government had allocated 2.18 million tonnes of low-grade ore for the fifth round of e-auction. Around five mt was sold in the earlier four rounds. The entire quantity kept had been sold in the first three; the fourth round had 185,765 tonnes of unsold quantity, plus rejection of bids for another 39,000 tonnes.

“With the ongoing festival season, response for the current bid was anticipated as poor. Since, the earlier bid also invited a weaker than expected response, the government preferred to postpone the auction,” said an ore exporter in Goa.

Low-grade ore bought through auction is primarily meant for export. However, with an export duty of 30 per cent, over and above a 10 per cent levy for the Goa Fund, participants are left with little realisation, says the trade. Also, purchasers are yet to lift the quantity bought in the first and second auctions, due to regulatory hurdles.

"Hence, traders and exporters are not so interested,” said Haresh Melwani, chief executive officer of H L Nathurmal & Co, a Goa-based ore miner and exporter.

Since mineral extraction was banned in Goa around a year earlier, based on recommendations of the M B Shah commission, mining companies held 15 million tonnes of low-grade ore. These are being cleared through the auctions.

During this period, however, ore prices have declined, hitting the export viability. Also, a change in import regulations by the government of China has made export of low-grade iron ore difficult from India.