JSW, others stay away from 2nd Goa iron ore auction

Point to poor quality, transportation hurdles; sale of 1.2 million tonnes gets good response from traders and exporters

Ore-starved JSW Steel kept away from participation in even the second round of auctioning  by the government of Goa on Wednesday, due to quality and transportation issues.

To feed its Dolvi factory in Maharashtra, it gets ore from every corner of the country at a viable price. Yet, it did not participate in the first round of 535,000 tonnes on February 17. The auction is part of a plan to sell 12 million tonnes of low-grade ore, mined 18 months earlier (there has been a subsequent, court-ordered restriction on mining and sale). The auction is being conducted on a direction from the Supreme Court.

“We have not participated on Wednesday due to poor quality of ore and transportation issues,” said Seshagiri Rao, joint managing director and chief financial officer. Goa conducted the second round to sell 1.24 mt after the successful completion of the first, which, too, saw participation mainly from traders and exporters.

Other mills also did not show interest. The auction again got encouraging participation from traders and exporters of Goa origin.

Prakash Duvvuri, an analyst with Delhi-based Oreteam, said: “The Dolvi unit has good plans and JSW is exploring an increase in capacity and to introduce a pellet plant. It would depend on how it would attain the raw material. Normally, JSW brings 30 mt of coal from Goa to Dolvi, so its rakes are almost running full.”

Goa ore has quality issues and delays in moving of cargo are impacting the decisions of not only mills but traders, too. The full payments for the first-round cargo haven’t been made as the department of mines and geology (DMG) has delayed the setting up of the supply-chain software.“Until it is done, traders are not willing to pay, as they don’t know when the cargoes can be moved,” he added.

A majority of the first-round cargo was bought by trading companies and the bid values were high compared to what could have been quoted by mining firms.  

JSW has registered itself, though, with the DMG for future participation.